Sunday, 5 December 2010

The tax avoidance debacle - what about inheritance tax?


After reading about the situation that has arisen between The Hub and the Forestry Commission, it got me thinking a bit more about the billions of tax pounds that don't reach the Treasury because of all the avoidance loopholes. It suddenly highlighted the next potential 'loophole' that will be flooding the rich list marketplace - Forestry and woodland.

As we all should know, there is no inheritance tax liability on forestry or woodland, so it makes it a fairly lucrative asset, especially if it's generating an income in the meantime. But it's also one that's quite difficult to find at the right price at the right time. I know - I have been trying to find a little square of land for many years, but there's always something gets in the way. (Usually someone with a great deal more money.) Soon, however, there could be a huge sell off of up to 150,000 hectares of Forestry Commission land in England and I can't help but wonder if the Government has timed this nicely to coincide with a possible tightening of the existing tax avoidance 'schemes', especially in the wake of their capping the pension investments limits. Could we see multi-national companies and individuals with huge annual dividends shelling out their dosh on wood? Perhaps money really does grow on trees. It's certainly a very lucrative (and IHT avoiding) investment if we can afford it. It also puts the some capital back into the public purse. Sounds a bit of a 'quick fix' solution to budget deficits, albeit on a tiny scale, but the land they'll probably sell will be based on commercial viability. If it doesn't pay, get rid of it. Good theory if you haven't the readies to develop something - cut and run, let someone else do it, then tax them somewhere along the line.

What I don't quite understand is how the sell-off will contribute to the current green policies and how virtually privatising forests will help the Government to achieve the unrealistic carbon emissions reduction targets. Surely, by selling the woodland & forests into the private sector, it can only result in commercialisation of that land and I wouldn't bet on it all being for eco-friendly biomass. I realise that one man and a chainsaw cannot manage a huge forest, but nor can he take up residence to earn his living from that land, even if he owns it outright. So the 150,000 hectares that's set to flood the market will surely become the property of the chosen few. No word of a similar sell off here in Scotland, yet, but let's hope the day never comes when we see the break up of the great Galloway Forest.

My suggestion would be to contact your local Forestry Commission and stake your claim on whatever you can. Ask friends, relatives, colleagues and acquaintances, set up a co-operative, do whatever it takes to keep the forests and woodlands from being ruined. At worst, you can cultivate part of it, apply for a holding number and follow a frugal lifestyle whilst planning your retirement. Your kids won't be liable for inheritance tax but neither will they ever be able to live there. Nor can you. But if they ever abolish those rules, there'll be plenty of commercial entities out there waiting to snap up your land when given half the chance.

Money may not grow on trees but without trees and the associated plant and animal life, what good is money? I'd venture as far as to suggest that our entire existence has relied on them.

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