Key facts
- Woodland relief defers IHT on the value of timber (growing trees) — not the underlying land.
- It applies to woodland in the UK or EEA.
- IHT becomes payable on the timber when it is sold or disposed of.
- The relief is available on death only — not on lifetime transfers.
- If the woodland also qualifies for APR or BPR, those reliefs are generally more beneficial (and should be claimed instead).
What Is Woodland Relief?
Woodland relief is a specific IHT deferral that applies to the value of timber (growing trees) on land in the UK or EEA. When a person dies owning woodland, the personal representatives can elect for woodland relief, which leaves the timber value out of the estate calculation. The IHT on the timber is then deferred until the timber is sold.[1]
How Woodland Relief Works
- The land is included in the estate and taxed in the normal way
- The timber is excluded from the estate at the date of death
- If and when the timber is later sold, IHT becomes payable on the net sale proceeds
- The IHT is charged at the rate applicable to the original deceased’s estate
- The person who sells the timber is liable for the deferred IHT
Conditions for Woodland Relief
To qualify for woodland relief:[2]
- The woodland must be in the UK, Channel Islands, Isle of Man, or EEA
- The deceased must have been beneficially entitled to the woodland at death
- The woodland must not qualify for APR on the timber element (if it does, APR should be claimed instead)
- The personal representatives must make an election for the relief within 2 years of death
Woodland Relief vs BPR vs APR
| Relief | Covers Timber? | Covers Land? | Type |
|---|---|---|---|
| Woodland relief | Yes (deferred) | No | Deferral |
| BPR (commercial forestry) | Yes (100%/50%) | Yes (100%/50%) | Exemption |
| APR (agricultural woodland) | Sometimes | Yes (100%/50%) | Exemption |
Priority: Always check if BPR or APR apply first. A commercial forestry business run as a trade may qualify for BPR, which provides a full exemption (not just a deferral). Agricultural woodland ancillary to a farm may qualify for APR. Woodland relief is the residual option.
What Triggers the Deferred IHT?
The deferred IHT on the timber becomes payable when the timber is:[1]
- Sold (the most common trigger)
- Given away (other than between spouses)
- Otherwise disposed of
If the person who inherited the woodland dies before disposing of the timber, they can make a fresh claim for woodland relief on their own death — effectively deferring the IHT again.
Frequently Asked Questions
Does woodland relief exempt the timber from IHT?
No. Woodland relief is a deferral, not an exemption. The IHT on the timber is postponed until the timber is sold or otherwise disposed of. At that point, IHT becomes payable on the net sale proceeds. If the person who inherited the woodland dies before selling, the timber may attract woodland relief again.
Does woodland relief cover the land as well?
No. Woodland relief only applies to the timber (the growing trees). The value of the underlying land is included in the estate and is subject to IHT in the normal way. If the land qualifies for APR or BPR, those reliefs can reduce the IHT on the land.
When should I use woodland relief instead of BPR or APR?
Woodland relief is the “fallback” option. If the woodland qualifies for BPR (because it is a commercial forestry business) or APR (because it is agricultural woodland), those reliefs provide a full reduction rather than a deferral. Only claim woodland relief if neither BPR nor APR applies.
Further Reading
- Business Property Relief (BPR) — for commercial forestry businesses
- Agricultural Property Relief (APR) — for agricultural woodland
- Calculating the Estate Value — what to include and exclude
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Sources
- Woodlands relief for Inheritance Tax — GOV.UK
- IHTM04311 – Woodland relief — HMRC