Green Saving And Pension Investments In Forestry

Green Investing helps with under performing savings and pensions.
Sustainable timber forests are helping people to get the most from their savings and pensions

Why Timber Investments?
Understanding the macroeconomics behind the timber industry is important to appreciate the investment return. As with all other commodities, the price of timber is driven by simple supply and demand factors.Supply side factors are the availability of resource, production capacity, weather conditions and the market price. Arguably, availability of resource is the fundamental factor. International boycotts on harvesting Timber through illegal forestry activities have restricted the supply chain in recent years, placing greater demand on cultivated plantations. Demand side factors are strongly correlated with Gross Domestic Product (GDP) and global populations. A strong economy increases timber demand from several industries due to its resourcefulness. The Housing and Construction industries have the greatest impact on Timber demand. Continued expansion and economic growth in Asia, Latin America and Russia alongside projected worldwide population increases to 9 billion by 2050 suggest demand will continue for timber.

There is also a clear financial incentive

Income Tax
Income realised through the sale of timber is exempt from income tax. No income tax relief is available against capital purchase or annual expenditure costs. Payments received under forestry grant schemes are tax free, with the exception of payments made in compensation for agricultural income foregone and revenue from other sources such as rents which are taxable.
Inheritance Tax
Following two years of ownership, commercial woodlands in individual ownership will normally attract 100% IHT Business Property Relief, thus removing them completely from any charge to IHT. If death occurs within the first two years of ownership the IHT liability can ordinarily be paid over ten years in interest free installments.
Capital Gains Tax
There is no CGT liability on the gain in the value of commercial tree crops. Any gain realized on the disposal of woodland is split between:
- gain attributable to trees - on which no CGT is payable
- gain attributable to the land - on which CGT is levied
Where funds realised on the sale of a qualifying business asset are re-invested in a new qualifying business asset up to twelve months before or three years after the sale then any chargeable gain from that sale can in principle be deferred until such time as the second asset is sold. Forestry is considered as an eligible trade for which this roll-over can be applied so gains from business assets can be rolled-over by the purchase of forestry land (but not standing timber), thereby postponing any CGT liability.In order to obtain full roll-over relief the value of the new business asset must exceed the sale value of the old asset, however, the cost of the new asset can be increased by subsequent capital expenditure on roading, drainage etc thereby helping address any initial shortfall in values.
Corporation Tax
Where companies own woodland which is independent of their trading opperations, there is no liability to corporation tax in respect of income realised through the sale of growing timber or payments received under forestry grant schemes as outlined above.
Return on investment
Forestry investment is currently making a return in the region of 11% per annum tax free and forestry investments are allowable for SIPPS.
Pension Investments
Pension Release is one of the ways in which it is possible to free up funds that are locked inside your pension scheme and use them to invest in Global Forestry helping to maintain a vital environmental asset.