Stamp Duty Land Tax and Commercial Forestry

A curious question was posed at last week’s RICS Rural Web class on Forestry Taxation and Valuation.  Can Stamp Duty Land Tax (SDLT) on the purchase of commercial forestry be reduced by removing the value of the trees from the overall purchase price?  Further investigation was required.

It seems that the Birmingham Stamp Office has agreed at least one SDLT settlement on this basis, because the trees were commercially-managed before the sale and will continue to be commercially-managed afterwards.  In this way they are treating the growing trees rather like curtains and carpets in a house sale.  A few websites have picked this up, urging anybody who has paid SDLT on the full transaction price in the last four years or so to pursue this.  For example, the Edinburgh firm of accountants Chiene and Tate advised the lodging of a protective claim here, and so did Scott-Moncrief here.

Meanwhile however there has been no official announcement from HMRC on the subject and little of real substance can be gleaned from the various reports which have circulated.  Rumour has it however, that there has been one refund of £600,000 and a spate of other claims to the SDLT office.  Meanwhile it would appear that the SDLT office is reconsidering as it is reported to have sent ‘holding letters’ to those seeking refunds while it considers its position.

The view of most informed commentators is that this is all nonsense.  Trees are an integral part of the land until they are felled (much like a building) and are therefore part of the consideration for SDLT purposes.  But the possibility remains that if you have paid SDLT on commercial forestry in the last few years it may be worth lodging a claim, to put yourself in with a slim chance before or if this window is firmly closed.

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