RICS Rural launched its Woodland Taxation and Valuation Briefing Paper at the RICS South East Rural Update, Paddock Wood in Kent on 24 February.
A link and introduction to the full briefing paper can be seen here:
http://www.rics.org/uk/knowledge/news-insight/news/woodland-taxation-and-valuation--a-professional-briefing-paper-for-surveyors-1st-edition-february-2014-/
David Lewis and I used these slides to cover the key points in the papers, including some worked examples.
10. APR
• Claim at 100% of Agricultural Value
(£40,000)
• BPR on balance (£30,000)
• Nil IHT
• BPR not available? IHT on £30,000, ie
£12,000
11. Woodlands Relief (1)
• Value to Prairie Value
• IHT due on £15,000 @ 40% = £6,000
• Further IHT on subsequent sale of
timber (if ever)
12. Woodlands Relief (2)
Literal interpretation
• Market Value – Timber and underwood
value
• £70,000 - £20,000 = £50,000
• IHT on £50,000 @ 40% = £20,000
13. No claim for relief
• Market Value at 40% IHT
• £28,000
14. One wood
Five different IHT scenarios
•
•
•
•
•
No relief: £28,000
Literal Woodland Relief: £20,000
Prairie Value Woodland Relief: £6,000
APR but no BPR: £12,000
Full BPR and/or APR: Nil
15. The striking impact of Amenity
Value
Timber and Underwood
The rest: Amenity Value?
Prairie Value
Where does
this go?
19. Our example wood again
•
•
•
•
Just sold for £70,000
Acquired for £30,000
Value of standing timber £20,000
Prairie value £15,000
20. One approach
• Deduct timber value from MV
– £70,000 - £20,000 = £50,000
– Apply same ratio to base cost = £21,500
– Gain therefore £28,500
– CGT at 28% £7,980
21. Another approach
• Divide the synergistic amenity value
– Prairie value:standing timber: 15:20
– Applied to £70,000 - £40,000 is timber
value; therefore £30,000 for land
– Base cost on same basis: £12,900
– Chargeable Gain therefore £17,100
– CGT at 28%: £4,788
22. Non commercial
• CGT on full gain
• £70,000 - £30,000 = £40,000
• £40,000 gain at 28% CGT = £11,200
24. The moral of this story
MAKE IT AND
KEEP IT
COMMERCIAL
AND be
able to
prove it!
25. We are:
Charles Cowap
David Lewis
cdcowap@gmail.com
07947 706505
david.lewis@rau.ac.uk
01285 652531
www.harper-adams.ac.uk
@charlescowap
www.charlescowap.word
press.com
www.rau.ac.uk