Consultation outcome

Taxation of environmental land management and ecosystem service markets

From:
HM Treasury
Published
15 March 2023
Last updated
6 March 2024 — See all updates
This consultation has concluded

Download the full outcome

Taxation of environmental land management and ecosystem service markets Government response to the consultation and call for evidence on selected tax issues

PDF, 334 KB, 31 pages

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Detail of outcome

Following careful consideration of the responses to the call for evidence and consultation, the government has decided:   

  • to establish a joint HM Treasury and HMRC working group with industry representatives to identify solutions that provide clarity on the taxation of ecosystem service markets where existing law or guidance may not provide sufficient clarity
  • to extend the existing scope of agricultural property relief from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies
  • not to restrict agricultural property relief to tenancies of at least 8 years

Original consultation

Summary

The government is seeking views on the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax.

This consultation ran from
to

Consultation description

As announced at Budget 2023, the government is exploring elements of the tax treatment of ecosystem service markets and environmental land management.

Part 1 of this document is a call for evidence on the tax treatment of the production and sale of ecosystem service units. The aim is to understand the commercial operations and the areas of uncertainty in respect of taxation.

Part 2 of this document is a consultation about the scope of agricultural property relief from inheritance tax. The aim is to explore the extent to which the current scope of agricultural property relief may represent a barrier and, if necessary, potential updates to the scope of the existing land habitat provisions in the relief. The government is also using this opportunity to explore in more detail a recommendation in the recent Rock Review of tenant farming in England to restrict the application of 100 per cent agricultural property relief to longer tenancies of 8 or more years.

Documents

March 2023 Taxation of environmental land management and ecosystem service markets: Consultation and call for evidence on selected tax issues

Ref: ISBN 978-1-915596-63-5

PDF, 583 KB, 32 pages

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Published 15 March 2023
Last updated 6 March 2024 + show all updates

  1. Consultation response added

  2. First published.