Three organisations – the CLA, Confor and the RFS – are the main bodies representing landowner and forestry sector interests in Britain, particularly in relation to policy and tax changes. They have now joined forces to analyse and report on how changes to Inheritance Tax (Inheritance Tax) are affecting tree planting and the management of existing woodland. A survey carried out jointly by these organisations indicates that almost 60% of woodland owners in the United Kingdom are no longer willing to plant new woodland, because the British government has reformed inheritance tax.

What does the government want?

The British government has set out sweeping changes to inheritance tax reliefs, which came into force on 6 April 2026. These changes will directly affect agricultural and forestry holdings, as well as business assets.

Until now, agricultural land and business assets could qualify for 100% tax relief with no upper limit. Under the new arrangements, 100% relief will apply only to the first £2.5 million of the combined value of agricultural and business assets per person. For value above £2.5 million, relief will be reduced to 50%, meaning that an effective tax rate of 20% will be payable on the amount above the threshold, instead of the standard 40%. Spouses and civil partners will be able to transfer their unused allowance to one another, allowing a couple to pass on assets worth up to £5 million between them with no additional inheritance tax.

Shares quoted on the alternative investment market, which previously could attract 100% relief, will under the new rules receive only 50% relief regardless of their value. The British government is introducing new rules to limit the use of multiple trusts to circumvent the new £2.5 million threshold.

To ease the financial pressure on "asset rich, cash poor" businesses such as farms, the tax on these assets may be paid over 10 years free of interest.

Why does this worry forestry organisations?

These organisations regard it as a problem that, even with the £2.5 million threshold – raised after vigorous protests from the £1 million originally proposed – larger farms and woodland holdings will face enormous tax bills. This could force owners to sell part of their land in order to pay the tax, which in turn could jeopardise national targets for tree planting and food security.

What is happening now?

British woodland owners are reluctant to establish new plantings because of the government's inheritance tax reforms, and more than 200 owners, estate managers and agents report that the courses of action now under active consideration include felling timber immediately and selling woodland holdings.

This is the finding of a joint survey carried out by the Country Land and Business Association (CLA), the Confederation of Forest Industries – Confor, and the Royal Forestry Society – RFS. The survey results were submitted to HM Treasury and the Department for Environment, Food and Rural Affairs – DEFRA, and were also included in Country Land and Business Association letters to Members of Parliament and other stakeholders connected with the forestry sector.

The joint submission is the first sector-wide assessment in British forestry of the reforms' impact on woodland investment. Citing this evidence, the three organisations representing the sector express concern that the new rules may lead to the fragmentation of family-owned woodland and mixed holdings, and to a rush to fell.

"Reduced tree planting, premature felling, land sales – this is the warning coming from the forestry sector, because the country risks forestry land becoming an unintended casualty of the government's inheritance tax changes," stressed CLA President Gavin Lane, noting that the survey is the first sector-wide evidence of the reforms' impact on forestry investment.

Only a third of respondents to the survey said they believed the tax changes would not affect them, while almost 60% of participants are unlikely to establish new woodland. Others point to felling or selling woodland earlier than planned and to reduced investment in forestry in future.

"We know that these reforms are damaging family businesses across the United Kingdom, but far less attention has been paid to the impact of the changes on forestry," said Mr Lane. Forestry typically carries substantial capital value, yet it generates comparatively low levels of income and irregular long-term returns, and under the newly established criteria family forestry businesses are unfairly exposed to risk.

Contradictions and the threat to investment in the sector

The CLA, Confor and the RFS warned that premature felling and a decline in afforestation among the businesses surveyed will, in the medium term, affect the United Kingdom's domestic timber supply, and that woodland carbon storage capacity and continuous cover forestry will be affected in the same way. A long-term management approach depends directly on woodland ownership passing from one generation to the next.

"The government has legally binding environmental targets and ambitions to accelerate tree planting plans in Britain. This data clearly shows that the government's targets are at risk. It undermines the forestry sector and the returns on the investment made to date," stressed Gavin Lane.

A United Kingdom government spokesperson said that the Treasury supports forestry by investing £1 billion in tree planting, and that the inheritance tax exemption for woodland will remain unchanged, with woodland continuing to benefit from a favourable income tax and capital gains tax regime. The spokesperson said the British government has raised the inheritance tax relief threshold for agricultural and business assets to £2.5 million in order to give greater protection to small family businesses and farms, while ensuring that the largest estates make a fairer contribution to the United Kingdom's public finances.

The data gathered has already been submitted to HM Treasury and the Department for Environment, Food and Rural Affairs. Mr Lane warned once again that the forestry survey results have exposed two significant contradictions for the British government that must be resolved without delay: on the one hand there are legally binding ambitions to plant woodland, and on the other there is a forestry sector that wants to change the very investment decisions on which those ambitions depend.