Given the ambitious housebuilding targets set by the current government, these planning changes could result in a huge demand for land outside of residential developments to be utilised for creating biodiversity net gains. While demand and price for such land will vary in each region, in some areas very significant new revenue streams could be created. However… while the opportunity to create a new, stable, income stream using unprofitable land is undoubtedly appealing, care should be taken as there are still a large number of uncertainties regarding the application of biodiversity units. Firstly, any land offered up for biodiversity projects must be taken out of normal active production for a period of at least 30 years. Even after this initial period has passed, it may be problematic to return the land back to productive use. The land may have become an ecological area of great significance for example, which would prevent any change of use.
Secondly, there are still a large number of of unknowns regarding the tax status of biodiversity units. Will land given over to biodiversity initiatives still qualify for valuable Inheritance Tax Reliefs such as Agricultural Property Relief and Business Property Relief? Will Capital Gains Tax Reliefs such as Holdover, Rollover and Business Asset Disposal Relief still apply if the land is gifted or sold? The legislation just simply hasn’t caught up with the new opportunities. While nothing is certain, it is thought that providing some kind of trading activity is still undertaken on the land, then many tax reliefs may still be applicable. However, the level of the trading activities that need to be maintained is still unclear. There may also be issues to consider with many landowners who have entered into agreements for renewables on some areas of their land in recent years.
The importance of understanding new and emerging opportunities cannot be downplayed, especially at a time when there is increasing pressure on agricultural income. However, any decision which is likely to have a multigenerational effect on a landholding should not be taken lightly and without obtaining detailed, professional advice. At Scrutton Bland we have a number of clients who are leading the industry in this area and looking to create some exciting biodiversity projects using their landholdings. As such we have both knowledge and experience in providing detailed tax and business advice for businesses looking at opportunities in biodiversity net gains. Please get in touch with the team by calling 0330 058 6559 or emailing hello@scruttonbland.co.uk
AGRICULTURE AND FARMING | SCRUTTON BLAND | 9
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