Investment

By its very nature, forestry should be viewed as a long term investment. Capital growth in forests is secured through the biological growth of trees, leading to an increase in unit value. In addition, investment returns are further enhanced through careful tax planning.

Biological Growth:
Physical tree growth leads to an annual increase in the volume of timber in a given area. Growth rates are influenced by the climate, numerous site-specific factors and the age of the tree. As individual trees' size increase, higher value commodities are produced and harvesting costs diminish leading to a significant increase in unit price for the trees.

Timber Prices:
Historically, timber prices have kept pace with inflation. A somewhat prolonged period of poor timber prices ended recently with an upturn in demand and our faith in the value of timber in the longer term has been boosted.


Taxation:

  • Income Tax - Timber income generated from the ownership of commercial forestry is free of income and corporation tax. Forest grants are also tax exempt with the exception of annual grants paid under the Farm Woodland Premium Scheme.
  • Capital Gains Tax - The increase in value of timber through physical growth and timber price increases is exempt from CGT. Increases in the underlying land value is not exempt but can be indexed.
  • CGT - Rollover relief - A CGT liability can be deferred by rolling over into another qualifying asset. Only forest land qualifies, although the deferred CGT liability could be extinguished if land is held until death.
  • Inheritance Tax - All commercial woodland qualifies for 100% business property relief, provided they have been held for two years.
A Green Alternative:
There are also wider environmental benefits of forestry including landscape enhancement, habitats and biodiversity, value and leisure opportunities. Sustainably-based forestry also assists with reducing CO2 in the atmosphere and global warming.

Pryor & Rickett Silviculture are experienced at locating, assessing and valuing forestry properties throughout the UK. An appraisal will involve assessments of legal constraints, crop potential and risk. Full financial assessments use discounted cashflows in order to assess rates of return. Our professionally qualified staff will act on clients' instructions to negotiate and purchase forestry properties and provide a subsequent management service.