Forester's Diary (August 2022): Schedule D and the impact of taxes on forestry

“Yes,” I shouted, hurling the financial pages in the air and punching the sky. After all those years promoting forestry as an investment, at last, recognition. All those lecture seminars, all those field trips, all those meetings with eminent lawyers and clever accountants in the sanctity of towers of glass and concrete which coalesced into Canary Wharf. All that effort to get our message across at last recognised! 

But wait a moment. Forestry and tax once marched hand in hand, with more and more new planting, and more and more years of capital untaxed growth, but that was all 30 years ago, wasn’t it? Had the Sunday Times managed some kind of time warp, something those clever financiers had missed? Because to my certain knowledge, a government did away with many of the tax breaks in about 1990. I know. I was there. Commercial established softwood plantations prospered and continue to do so.

There is already realisation that there is – not will be, but is – a serious shortage of sawn timber, and one which can only get worse as forest fires blaze again in France, Portugal, Spain and, of course, in Ukraine. To say nothing of unprecedented floods in East Australia. And we (humanity, that is) are still a million miles away from recognising climate change is upon us. Two or three hot days in mid July is just a foretaste of what is coming and coming soon.

I apologise for riding my current and continuing hobby horse when there are other shows in town. The debate as to whether hopeful Tory leaders will cut taxes or not brings us back to those early days of tax-sheltered forestry in the 1970s and ’80s. Those were days of high income tax for top earners, with the top rate at 83 per cent – even more on unearned income. And it introduces a humorous, soft-spoken City of London accountant called Kenneth Rankin. Commuting to his home in Surrey, he had a eureka moment. It all depended on whether forestry could be taxed as a business, not a pastime for highland lairds and landowners. He showed how the status of forests as commercial allowed the costs of new planting to be set against these ridiculously high rates of tax, making establishment costs allowable for income tax relief. This was the famous Schedule D.

So an intrepid planter spending say £50,000 on planting Sitka on furrows in the Scottish Borders actually only paid about £10,000 in real money – less after receiving grants from the Forestry Commission – and ended up owning a fine plantation. Ken and I worked together to demonstrate the tax benefits – he in accountancy and me in the forest, acquiring plantable land. Our client list was impressive, ranging from captains of industry to famous showbiz and sporting personalities who visited their woods regularly and took a real interest in their prosperity. So we did a wide number of presentations, both in plush offices and on the hill (wellies provided). My long-term secretary, the redoubtable Mrs Alabaster, once came all a-flutter into my office.

“Do you know who is in our car park? I swear it’s Cliff Richard,” she bubbled.

I once laid on a day out, with lunch in a Yorkshire Dales pub, for the Leeds partners of a very well-known accountancy firm. The senior partner shook my hand vigorously, as we prepared to walk the Sitka plantation.

“Thanks, lad,” he beamed. “I’ll be off. I only came for the lunch.” But he stayed and invested – as did his clients. 

Cliff Richard

So here’s a double whammy for the successful Tory candidate. Don’t cut taxes or introduce new ones. Bring back Schedule D! Plant more trees and save the planet at the same time. Publicity in the Sunday Times will help, I’m sure. But it might take a little time to catch up. 

Ken Rankin, long since passed away, was one of forestry’s unsung heroes. He used to stand on his head for a few minutes after rising in the morning. On reflection, I might try that.

Everything else seems to be going topsy turvy these days, doesn’t it?