Tax strategies and biodiversity: ensuring a sustainable future

Our team of experts specialise in property taxes, working closely with landowners and agricultural businesses. Our goal is to help you navigate the increasingly complex tax landscape while balancing family support and preserving assets for future generations. 

Understanding environmental schemes

We have been focusing on helping our clients understand new environmental schemes, such as the Biodiversity Net Gain (BNG) regime. These schemes can offer significant benefits, but it’s crucial for agricultural businesses to ensure they do not negatively impact existing tax positions that have been built over generations. 

Investing in nature recovery

We are seeing more businesses and landowners looking to invest in nature recovery. Landowners have long been encouraged to diversify, and nature recovery has been widely welcomed as another viable option. Residential developers are now approaching landowners to explore the new BNG regime, and proactive landowners are also actively exploring the opportunities it offers for future generations to profit. 

Why invest in biodiversity?

Landowners, particularly in national parks, have always been keen on protecting and improving the biodiversity of their land. It’s good business. Now, there’s an added financial incentive. Landowners who choose not to invest in biodiversity risk future generations missing out on a valuable revenue stream. But there’s often more to it than that—landowners genuinely want to leave their land in a better condition for their children and grandchildren. 

Tax hurdles for landowners

The biggest issue for landowners looking to set aside land for nature is the lack of clarity and certainty surrounding the tax treatment of various options. Schemes like the BNG regime are being implemented, but the technical guidance needed for long-term planning is still lacking. Landowners need to be flexible to minimise reorganisation when specific rules are established. 

Understanding the tax treatment of income from nature recovery schemes is crucial. Depending on whether HMRC views it as capital or revenue, there can be a 35% difference in tax rates. Clarity is also needed around inheritance tax and its impact on land treatment. Although some guidance has been provided, more is still needed. 

Tax hurdles for businesses

For businesses looking to invest in nature recovery on other people’s land, the primary concern is the uncertainty surrounding tax treatment. Additionally, these schemes often require a fundamental shift in business practices and long-term commitments. 

Reducing the tax burden

Planning is key to reducing the tax burden. Getting good advice ahead of time gives businesses and landowners more options. These options may have a limited impact today but can offer significant benefits for future generations. Planning often revolves around maximising tax reliefs, addressing potential business changes like succession, and considering future land uses. 

Benefits of reducing the tax burden

Any money saved on taxes means more funds are available to reinvest in the business or support day-to-day living. This is true for income tax, inheritance tax, and planning for future generations. Avoiding the need to sell property to meet inheritance tax obligations can prevent devastating impacts on farming businesses. 

Our top tip for tax and nature recovery? Get advice! Build a strong team of specialist advisers to support you and your business now and in the future. Contact our team today.