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HMRC internal manual

Inheritance Tax Manual

Assessing: calculations: recapture charges: calculating the tax on disposal of woodlands

Tax is charged on the net value of the trees or underwood at the time of the disposal. If the disposal was a sale for full consideration, you should take the net sale proceeds.

The deductions you can allow under IHTA84/S130 (2) are:

  • the costs of the sale/disposal
  • Capital Gains Tax on this disposal
  • Expenses incurred in replanting within 3 years of a disposal to replace the disposed property
  • Additional expenses incurred in replanting to replace trees or underwood previously disposed of.

Add the net value to the value of the death estate that was last calculated to arrive at the revised aggregate chargeable transfer.

Recalculate the death estate tax, applying the Inheritance Tax nil rate band that was in place at the date of the disposal. Deduct any tax previously paid on the estate.

Charge interest (IHTM31511) from the day after the due date (IHTM30156).