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HMRC internal manual

Inheritance Tax Manual

Woodlands: the deferred charge

Where the value of trees or underwood has been left out of the account (IHTM04371) in calculating the value transferred (IHTM04028) on the death of the deceased, then

  • on a subsequent disposal of the trees or underwood, whether all or only part of them, and whether with or separate from the land
  • tax is charged in relation to the death of the deceased, IHTA84/S126.

A disposal will not be an occasion of charge in relation to a particular death if

  • it is between spouses or civil partners (IHTM11032), IHTA84/S126 (2)
  • the very same trees or underwood disposed of have previously been the subject of a disposition which occasioned a charge in relation to that death, IHTA84/S126 (3). This applies also if either of the dispositions in question is of an interest in the trees or underwood (unless the earlier disposal was of an interest for full consideration, and the current disposal is of the trees or underwood or of another interest therein - such a case should be referred to Technical , or
  • a death has intervened, and the value transferred by the chargeable transfer (IHTM04027) made on that death is attributable in part to the land on which the trees and underwood were growing at the earlier death, IHTA84/S126 (1).

As a general rule, disposals of casual windfalls of trees and underwood which have been left out of account under IHTA84/S125 should be charged to Inheritance Tax (IHT) in connection with the deceased’s death in the usual way.

However enquiries about deferred IHT or Capital Transfer Tax on woodlands damaged by storms, such as those on 15/16 October 1987, early 1990, and November 2000 and any offers to pay tax on the proceeds of timber so damaged, should be referred to Technical.