How best to capitalise on woodland for investment and climate change?

Planting woodland to enhance the landscape and reduce the effects of climate change is considered beneficial for biodiversity and cutting our carbon footprint, and at some point, providing an income for the landowner.

However, recent observations in Finland, which pledged to reach the carbon neutral status 15 years ahead of everyone else (by 2035), highlight the reality that climate change has altered that path.

They have been taken back decades due to global warming affecting the vast Taiga boreal forests which are drying out - as are the vast areas of peatland, the result is that both are now venting Co2 and creating a knock-on effect on the flora and fauna. Finland has always been in a strong position to advocate natural capital as the key part of the fight against climate change, so this is worrying.

Keith Muir, Davidson & Robertson Assocaite Director

Keith questions if we are doing enough to ensure our new woodlands are resilient enough in the long term to withstand climatic changes and says “We should not continue to plant the same species without looking further afield and observing and learning from our neighbours.

“Our forests must be resilient and that means more diverse. Monocultures of broadleaf or conifers may not be successful in the future. Pests and disease are gaining bigger footprints – consider the eight toothed Spruce Bark Beetle, the Oak Processionary Moth, Dothistroma Needle Blight, and Ash Dieback to name but a few.

“Swedish research * indicates the relationship between species richness and multiple ecosystems were higher with five tree species than with one. Importantly, soil carbon storage was 11% greater, biomass production was 54% greater, and berry production up 45%.

“If we are to have a future income for the next generation, as well as having a timber industry, we need to be bolder with our planting choices.

“We must plant and properly manage our land with a diverse range of species able to deal with drought or flood on our temperate island. We need sawmills that can work with different species, and we need architects that are not afraid to use non-standard species to create the homes of the future.”

There is a need for a rural package that can adapt quickly to each site and circumstance accordingly. Without all these elements, there is no guarantee that forests and woodlands will be able to supply the multi- benefit outcomes we aim to deliver and have enjoyed for recent decades.

What of the October Budget?

For a long time, the forest sector has benefited from tax breaks that helped increase the woodland cover across the UK. However, with Government coffers empty, this sector is being scrutinized.

For now, tax exemptions on proceeds of felling remain however, commercial forestry that previously qualified for 100% inheritance tax relief under Business Property Relief, will be taxed from April 2026, at the rate of 20%(this includes a 50% property relief reduction on the standard 40% rate).

The government plans to review taxation in 2025, so there is still uncertainty ahead. Minimum wage and NI increases will affect the rural sector directly or indirectly. It remains to be seen how the woodland sector in Scotland responds to the budget increases through the Barnett formula and if the cuts in the woodland sector grants will be turned around on the back of it.

We urge all woodland owners to seek professional tax advice to ensure succession planning is well planned. For more information on planting and managing woodland, contact Keith Muir, D&R Associate Director on 01556 502 270.

*Higher levels of multiple ecosystem services are found in forests with more tree species : Gamfeldt, L., Snäll, T., Bagchi, R. et al. https://rdcu.be/dXGby