HMRC’s recent consultation Taxation of environmental land management and ecosystem service markets looked at two areas: (1) tax treatment of the production and sale of units generated by ecosystem service projects, and (2) the potential expansion of agricultural property relief (APR) to cover certain types of environmental land management.
Responding to the IHT APR section of the consultation, the CIOT proposes that farmers and landowners are only likely to engage with environmental management schemes if entering into those schemes will not result in a worsening of their overall financial position. Loss of APR, where use of the land is changed from agricultural to environmental would be one such barrier.
The CIOT also notes that this was a narrow consultation on one aspect of APR and that a wider, more general review of the relief would be beneficial, not least to avoid piecemeal reform which it says will ‘layer complexity on top of an already imperfect system’. One potential challenge in the future could arise, for example, where two otherwise identical blocks of land, used for the same environmental purposes, have different IHT statuses because one block was previously used for agricultural purposes but the other was not.
HMRC’s recent consultation Taxation of environmental land management and ecosystem service markets looked at two areas: (1) tax treatment of the production and sale of units generated by ecosystem service projects, and (2) the potential expansion of agricultural property relief (APR) to cover certain types of environmental land management.
Responding to the IHT APR section of the consultation, the CIOT proposes that farmers and landowners are only likely to engage with environmental management schemes if entering into those schemes will not result in a worsening of their overall financial position. Loss of APR, where use of the land is changed from agricultural to environmental would be one such barrier.
The CIOT also notes that this was a narrow consultation on one aspect of APR and that a wider, more general review of the relief would be beneficial, not least to avoid piecemeal reform which it says will ‘layer complexity on top of an already imperfect system’. One potential challenge in the future could arise, for example, where two otherwise identical blocks of land, used for the same environmental purposes, have different IHT statuses because one block was previously used for agricultural purposes but the other was not.
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