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Forestry Investment News
Timber funds offering all-important tax mitigation
14/06/2010
People are increasingly turning to timber investment funds as means of mitigating the effect of both inheritance tax (IHT) and capital gains tax (CGT).
The pressure to alleviate tax pressures has resumed in the light of news that CGT will rise at the emergency budget and Tory plans to raise the IHT threshold have been shelved.
The versatility of a forestry fund means that, when structured as partnerships, the land and tree crop values become eligible as business property, which means 100 per cent relief against IHT after two years official ownership. In the same situation, CGT would not be payable on the growth in value of tree crops and is only levied on any rise in land values.
One key timber investment fund manager said the tax reliefs, coupled with the growing demand for timber, meant its strength as an asset was growing daily.
He said, "The UK imports 85 per cent of the timber we use. With so many biomass power stations being built and with the first, the Port Talbot site, set to come on stream in just two or three years, we think demand can only grow from here."
The pressure to alleviate tax pressures has resumed in the light of news that CGT will rise at the emergency budget and Tory plans to raise the IHT threshold have been shelved.
The versatility of a forestry fund means that, when structured as partnerships, the land and tree crop values become eligible as business property, which means 100 per cent relief against IHT after two years official ownership. In the same situation, CGT would not be payable on the growth in value of tree crops and is only levied on any rise in land values.
One key timber investment fund manager said the tax reliefs, coupled with the growing demand for timber, meant its strength as an asset was growing daily.
He said, "The UK imports 85 per cent of the timber we use. With so many biomass power stations being built and with the first, the Port Talbot site, set to come on stream in just two or three years, we think demand can only grow from here."
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