On the use of tax incentives

Ritchie notes this:

Investing in woodland

Investing in commercial woodland attracts the flowing tax advantages:

  • Capital Gains Tax. As timber grows it will increase in value. This increase is exempt from capital gains tax, but any increase in the value of the land is not exempt.
  • Income Tax. Any income or profit generated from woodland is exempt from income tax.
  • Inheritance Tax. Commercial woodlands (including both land and timber) qualify for 100 per cent Business Property Relief provided they have been owned for at least two years.

And then tells us that re this flogging off the Forestry Commission thing that:

Pretty much tax free destruction of one of our most valuable natural resources is coming our way soon.

Eh?

Tax breaks on the growing, ownership, maintenance and management of woodland means that everyone will destroy woodlands?

What?

10 thoughts on “On the use of tax incentives”

  1. It’s worth also noting that the Commission is going to have huge cash inflows; in one area that I am familiar with the FC has a perpetual lease at essentially zero rent from one of the major local landowners. In order to release the land back to the landowner and allow them to make some money out of it, the FC is going to have to be bought out of the lease at commercial rates. Add that up across the million or so hectares that it controls and it adds up to a very sizable one-off income.

    The FC was set up in 1919 to maximise the available supply of timber in the UK after massive felling for wood to prop up the trenches in WW1, and has since morphed into a quango to maximise public benefit and has doubled its land holdings. It is chaired by Pam Warhurst, green activist, arch quangocrat and former Labour head of Calderdale council.

  2. “Pretty much tax free destruction of one of our most valuable natural resources “: you only destroy woodland when you choose to use the land for farming, housing or whatnot. Taking off a crop isn’t destruction. Does he talk about destruction of a field of wheat when it’s reaped? Arsehole. And why does he call a piece of woodland a “natural resource”? Arsehole in spades.

  3. The only way the tax incentives would lead to destruction of woodland would be if the CGT was zero on the land appreciation not on the crop. Having a CGT exemption on the value of the crop encourages owners who want to sell their holdings to sell with the trees intact, surely?

  4. @Wolfie – no, it would encourage people to realise value by cutting down trees and selling, but also encourages repeat economic activity and so drive replanting

    I *think* what Ritchie is moaning about is the idea that trees are a crop which have to be harvested and sold now and again, rather than some sylvan paradise where ruddy-faced ramblers and their apple-cheeked offspring can laugh and play in some communal anti-capitalist paradise, far from such workaday concerns as having to earn a living.

  5. Look, no one can cut trees down and not replant them, private owner or State owned. You need a felling licence from the Forestry Commission and one of the conditions is ALWAYS that you replant what you’ve cut down. Sometimes that can be achieved by natural regeneration (ash coppicing for example) or otherwise by physically planting seedlings.

    So no one will be cutting down the forests and leaving vast areas of open country. In fact you may get more private owners doing less intensive forestry operations, as forests are a good IHT dodge. Which will be good for the wildlife and ramblers anyway.

  6. I gather we’re back to C14th levels of forestation now so there’s no shortage of trees.

    [email protected]
    I find it hard to imagine Murphy as being either ruddy faced or apple cheeked.
    Sort of pallid & doughy with a soft clammy handshake & a slight odour of TCP antiseptic due to his personal problem seems more persuasive.

  7. This whole non event is a classic example of left wing ignorance on the subject of the rural economy and the history and ecology of woodlands in particular. The amusing thing is that a generation ago the FC were one of the leading bogeymen of the emerging Green movement, castigated for carpeting the pristine uplands with a lifeless sylvan monoculture.

  8. Assume this sell off refers to England only and even DEFRA would not be mad enough to sell off the iconic New Forest and Forest of Dean to developers.

    In Scotland the devolved government are in favour of covering their hills with wind turbines and sitka spruce which will certainly finish off the tourist industry.

    If anybody thinks that it is a good idea for the Forestry Commission to continue to plant sitka spruce on hill land suggest they read Chapter 9 of Derek Ratcliffe’s Galloway and the Borders – and weep.

  9. Except where they are deliberately pitched at recreation, managed forests are about as congenial an environment as a turnip field, and with good reason (they’re like a dark turnip field with really tall turnips.) And as others have pointed out, the idea that they are in any way a ‘natural’ resource is utterly risible. Presumably in the recreational woodland areas it’s squirrels who make the firebreaks and gnaw the signposts to the car-park.

    RMIAC. ← my new motto

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