Natural Capital taxation
7 June 2024
In the Spring Budget 2024, the Government announced that it would extend the scope of agricultural property relief from Inheritance Tax to environmental land management. These changes were expected to take effect from 6 April 2025. However, not all tax measures announced at Spring Budget 2024 were to be included in the Spring Finance Bill 2024, including the specific detail of the tax measures to be introduced in relation to the tax treatment of ecosystem service markets and environmental land management which was expected to be legislated by secondary legislation and future Finance Bills.
Following the announcement of the General Election on 4 July 2024, Parliament was dissolved on 30 May 2024 throwing up further uncertainty for landowners looking to exploit natural capital opportunities on their land. In the final week of parliamentary business, the Finance (No 2) Act 2024 was debated in the Commons and the Lords, receiving Royal Assent on 24 May 2024. As anticipated, the Finance (No 2) Act 2024 contained one minor amendment to the scope of agricultural property relief (restricting it to land and woodlands in the UK only). Otherwise, there has been no substantive change to the scope of APR and specifically, the measures to extend the availability of APR to land used for environmental purposes have not yet made it onto the statute books.
It remains to be seen whether this is something that a future government will look to legislate through future Finance Bills, for now the status quo remains: moving land out of agricultural production to be used for environmental purposes potentially jeopardises the availability of inheritance tax reliefs.
If you would like to discuss the implications for you further, please contact Sophia Key or Emily O’Donnell.
-
Sophia Key
-
Emily O’Donnell
Sectors
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2024.