Growing money from trees
Money doesn't grow on trees, but try telling that to green-fingered investors who have bought their own plot of woodland.
Sarah Routledge branches out into the world of woodland investments.
Buying your own plot of woodland has been gaining in popularity, as interest in nature conservation and renewable energy grows and becoming a landowner is no longer the preserve of the rich.
But there are also financial reasons for turning cash into trees, and buying a wood could be a unique investment for your own future as well as the planet's.
Why buy woodland?
Once a buyer has owned a plot of woodland for over two years, there is no inheritance tax to pay.
In addition, there is no income or corporation tax to be paid on any profits made from selling the timber from the wood.
Although there is no capital gains tax to be paid on any increase of the value of the timber, any rise in the value of the land itself will be taxed.
These tax breaks have attracted buyers in the past, but with as the UK becomes more eco-aware, the appeal of owning and managing a woodland has grown - and land values have risen as a result.
"We go there quite a lot, in the winter we do all the coppicing ourselves and we sell the wood to allotments. And a lot of our time in spring and summer is spent enjoying being outdoors," says Tracy Pepler, a primary school teacher who bought a woodland plot in Rye, East Sussex with husband Mike, who works for renewable energy charity Ashden Awards.
Mike and Tracy bought the plot after Mike received some money from a relative and the couple were keen to put the money somewhere safe.
Both are interested in nature conservation and have encouraged schools to visit the site to learn about woodland management.
"I think one of the principal reasons is people want a plot of woodland they can look after and enjoy," says Simon Felton, spokesperson for Woodlands.co.uk, a firm which specialises in selling woodlands.
"These people work the woods as a hobby rather than on a commercial basis.
"People buy them so they can go there and enjoy the woodland, for picnicking, camping, and nature conservation."
Buyers of woodlands range from city dwellers keen to escape to the countryside on the weekend, to nature conservationists and people who need a steady supply of wood for crafting or fuel.
But economic pressures have also played their part, Joe Fielding, from Woods4sale.co.uk says.
"We've seen a huge increase in interest in small woodlands over the last six to eight years. I thought with the credit crunch it would die a death but we are even busier than ever, because in times of uncertainty people want to buy land and gold.
"I think we are getting more interest because their investments aren't doing so well and they want safety."
Mr Felton adds, "Most people hope it will hold its value, and in fact it has during the recent house price collapse."
Woods4sale.co.uk currently has woodland plots for sale all over England and Wales, ranging from around £11,000 to over £100,000, while Woodlands.co.uk has a wide range of plots for sale as well as plots with lakes and rivers.
Financial benefits
Most popular with buyers are small woodlands, around ten acres or less, and people are using these as amenity woodlands, for camping and recreation, Mr Fielding says.
"But they also get an investment, somewhere secure to put their money - it is very unlikely it will go down in value and agricultural land has been going up in value over the last five or six years," he says.
"There is also the inheritance tax relief, the capital gains allowance you can roll over from another source, and if you are buying a commercial forest, you have a completely tax-free income from the timber.
"There are a multitude of things you can look at - windfarms if you are in an upland area, or a phone mast if you are near the road."
Forestry qualifies for 100 per cent relief from inheritance tax once you have owned it for more than two years and have been actively managing the woods. This includes the value of the land and the trees.
Another advantage of woodland purchases is the opportunity to 'roll over' any capital gains tax liability generated from the sale of a qualifying business asset, over a four-year window, against the land value.
This means that the tax you would have paid can be used to purchase a woodland and will not become liable for payment until the woodland is sold.
There is also no capital gains tax to be paid on the increases in the value of growing timber, although there will be if the land itself rises in value.
Ms Pepler says the income woodland owners make from their site is small, but the investment in the land itself is a solid one for the future.
"At the time, the housing market was going down and it seemed a sensible place to put our money," she explains.
"And looking to the future, wood fuel is a good investment."
Mr Felton agrees. "Wood fuel is also a small but important aspect," he says.
"We have sold to a few people recently who have a wood-burning stove, which in some cases heats the whole house, and over the year that can be a substantial amount of money."
Finding a wood
Mr Fielding says: "First of all, you need to look at why you want to buy it. Is it for tax, for amenity, or for timber?
"And you need to consider where you want to buy it. If you want to manage it yourself, or use it at the weekend, it needs to be close to home, or you may want something in the area you holiday in."
If you buy a woodland through a firm such as Woods4sale or Woodlands.co.uk, the price advertised is the price you will pay.
Other fees involved are paying a solicitor for the conveyancing work, which should cost between £500 and £700, including the cost of a land registry search, and stamp duty, although this is only payable above the threshold.
You should also take into account the work that must be put into managing woodland, which includes thinning out the trees - an ancient method known as coppicing - to ensure the trees and wildlife flourish, and maintain any fences or gates on the plot.
More information on buying and caring for a woodland can be found from the Small Woodland Owners' Group set up by Mike and Tracy.
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