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HMRC internal manual

Trusts, Settlements and Estates Manual

Trust management expenses: allowable expenses: specific items: woodlands expenses

Any profits or gains arising from the occupation of commercial woodlands are wholly outside the scope of Income or Corporation Tax. For general tax purposes, the receipts are not taxable nor are the expenses allowable. Woodlands expenses cannot be set against rental income or other activities at basic rate, nor can excess expenses be claimed as losses.

However woodlands expenses may fall to be trust management expenses properly chargeable to income on normal lines, even though any related income may not be taxable. Whether the woodlands expenses are properly chargeable to income depends on the circumstances.

Woodlands expenses may be chargeable to income if they are related to the income beneficiary’s receipts. Trust law on the subject of which receipts belong to income is very complex. There are principles about who is entitled to various woodlands receipts - whether it is ‘timber’, and so on (which depends on the custom of the country), and whether the income beneficiary is ‘impeachable for waste’.

Edinburgh and Nottingham Trust offices

If you receive a claim from a taxpayer or agent to treat woodlands expenses as TMEs you should submit the claim with full details, including the tax at stake, to HMRC Trusts Technical Edinburgh - See TSEM11100.