BIM67701 - Woodlands: Historical overview

Up to 14 March 1988 a person, including a company occupying woodlands that they managed on a commercial basis and with a view to the realisation of profits could, on giving notice to the Inspector not later than two years after the end of the year of assessment, elect to be assessed under Schedule D instead of under Schedule B.

The term `woodlands' is not defined by the statute and takes its ordinary meaning. It does not include orchards or nurseries where trees (including Christmas trees) are grown for sale or coppices where trees are harvested repeatedly every few years.

The right to elect for Schedule D treatment was abolished with effect from 15 March 1988 by FA88/S65 and FA88/SCH6, subject to certain transitional provisions which remained in force to 5 April 1993.

From 15 March 1988 any profits or gains arising from the occupation of commercial woodlands are wholly outside the scope of Income or Corporation Tax. Thus

• profits cease to be assessable under Schedule D and no relief is available either for losses suffered or for capital expenditure incurred on agricultural buildings or plant or machinery connected with commercial woodlands:
• no relief is available for expenditure incurred on the preliminary clearance of woodland or other preparation of land for forestry purposes such as replanting which was previously treated as a trade under ICTA88/S53 (3):
• any profits or gains arising from the occupation of commercial woodlands are specifically exempted from the charge under Schedule A.

The owner of a commercial woodland who lets it in return for a rent is unaffected by these changes and remains chargeable under Schedule A.

The treatment of timber merchants is not affected by the new legislation -see BIM66650 onwards.

Profits from the sale of trees in commercial woodlands remain exempt from Capital Gains Tax - see CG73200 onwards.

The provisions in the capital allowances legislation which give allowances on the construction of forestry buildings, fences and other works (CA40200 onwards) and on machinery or plant provided for the occupation of commercial woodlands (CA20006) also cease to apply on 6 April 1993, or earlier:

If guidance is required on the detail of the Schedule B regime or the right to elect for Schedule D contact Business Tax (Technical).