FCo Rural Estates Newsletter Spring 2022 - Flipbook - Page 15
There is also a nascent private market developing in which land (including woodland)
managers will contractually commit to deliver certain practices and outcomes in order to
generate carbon credits for sale.
Compatibility
“
One thing in common to many environmental schemes is the concept of ‘additionality’ an applicant must not already be under a contractual or statutory obligation to do works
inherent in the scheme. The underlying principle is that applicants should not be able to
receive two financial benefits for the same activity in respect of the same woodland (so
called ‘double-dipping’ or ‘double-counting’).
One thing in common to many environmental
schemes is the concept of ‘additionality’.
Conditional exemption requires undertakings to be given to HMRC that certain tasks
will be performed such as management, thinning, felling and replanting of woodland.
Therefore, owners may risk disqualifying themselves from participation in environmental
schemes by claiming conditional exemption or applying for designation if those
undertakings overlap with the works envisaged by the environmental scheme.
The same issue arises where an owner enters into undertakings with other third parties
in relation to woodland, such as contractual obligations between tenants and their
landlords to carry out certain works. Planning obligations or agreements between
developers and local authorities under section 106 of the Town and Country Planning Act 1990
(for example afforestation of arable for nitrate mitigation purposes) create the same problem.
Consider your objectives
Owners of woodland should proceed with caution in designating woodland for
conditional exemption if participation in an environmental scheme is in prospect.
The financial benefits are considerably different. Conditional exemption can form a
crucial part of long-term strategic planning for an estate and bring relief from hefty IHT
charges, without which the estate might not survive, plus it has the added benefit of the
opportunity to set up a heritage maintenance fund to support the woodland and wider
estate. Environmental scheme subsidies may provide much needed immediate cashflow
to fund works or plant new woodland and form part of an estate’s environmental and
sustainability strategy.
Rural Estates Newsletter
Spring 2022
15