Planting woodland is considered beneficial for biodiversity and cutting our carbon footprint and providing an income for the landowner. However, observations in Finland, which is leading in the pledge to become carbon neutral, indicates that climate change has altered that scenario.
Global warming has affected the Taiga boreal forests and areas of peatland, resulting in them drying out and both are venting Co2 instead of capturing it.
We need to ensure our new woodlands are more resilient in the long term, able to withstand climatic change. That means less monocultures and more diversity. Pests and disease are gaining bigger footprints; the Spruce Bark Beetle, the Oak Processionary Moth, Dothistroma Needle Blight, and Ash Dieback to name but a few.
Swedish research indicates the relationship between species richness and multiple ecosystems were higher with five tree species than with one. Importantly, soil carbon storage was 11% greater, biomass production was 54% greater, and berry production up 45%.
To have income for the next generation, and a timber industry, we must plant and properly manage our land with diverse species able to deal with drought or flood.
We need sawmills that can work with numerous species, we need architects who are not afraid to use non-standard species to build homes of the future, and we need a rural package that can adapt quickly for specific sites.
What of the October Budget?
Tax exemptions on proceeds of felling remain however, commercial forestry that previously qualified for 100% inheritance tax relief under BPR (Business Property Relief), will be taxed from April 2026, at the rate of 20% (which includes a 50% BPR reduction on the standard 40% rate).
The government plans to review taxation in 2025, so there is still uncertainty ahead. Minimum wage and National Insurance increases will affect the rural sector directly or indirectly. It remains to be seen how the woodland sector in Scotland responds to the Barnett formula and if the cuts in the woodland sector grants will be turned around on the back of it.
We urge all woodland owners to seek professional tax advice to ensure effective succession planning.
For more information on planting and managing woodland, contact Keith Muir, Associate Director, on 01556 502 270.
