The tax consequences of natural capital assets
A significant change is on the horizon for agriculture as the Government and industry looks to reduce carbon as part of the much bigger plan to become net zero.
There are opportunities for farmers and landowners for new contracts and schemes available for natural capital assets. However consideration of the tax and legal implications of such opportunities is imperative.
Under current rules, the tax treatment of a scheme/contract is usually defined by the nature and wording of the contract in place, but legal precedents are still being developed and the tax legislation is not yet complete here.
The income tax and VAT treatment of any payments received along with the initial and long-term effects on both capital gains tax and inheritance tax is therefore somewhat unknown and may significantly vary.
We would recommend speaking to your tax advisor, legal advisors and land agents before entering into such contacts.
Rowena Mottershead is an accounts senior in the Rural Services Team at WR Partners.
