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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Agricultural purposes: Farm Woodland Premium Scheme and other agri-environmental schemes

There are many other agricultural/environmental schemes that can apply to agricultural land.

The Farm Woodland Premium Scheme is administered by DEFRA, and exists to promote the establishment of woodland by offering annual payments to compensate for the agricultural income foregone. It is only available to farmers who must at the same time apply for grants under the Woodland Grant Scheme (WGS), as the environmental and silvicultural standards of the WGS must be satisfied before an FWPS application can be approved.

The Scheme is open to farmers who, either personally or through a manager, run an agricultural business that includes the land to be converted to woodland. Agriculture is defined in the Rules and Procedures and is broadly in line with that included in s.96(1) AHA 1986; keeping horses for recreational and/or sporting purposes is specifically excluded, as is fish farming.

Once accepted into the scheme the woodland must be maintained in accordance with good forestry practice and not returned to agricultural use for at least:

  • 30 years after planting in the case of woodland receiving payments for 15 years (generally more than 50% by area with broadleaves);
  • 20 years in the case of woodland receiving payments for 10 years (generally 50% or less by area with broadleaves).

Agricultural relief cannot be available as the whole purpose of the Scheme is to take land out of agriculture.

You should refer any cases involving schemes not covered by these instructions where it appears that the land is not occupied for agricultural purposes (IHTM24060) to Technical.