Glossary · UK
What is Woodlands Relief (Inheritance Tax)?
A fallback Inheritance Tax relief that defers tax on the value of standing timber (not the underlying land) until the timber is eventually sold, where 100% Business or Agricultural Relief does not apply.
Full Definition
Woodlands Relief is a little-used Inheritance Tax relief that applies to commercially managed woodland where the more generous 100% Business Relief or Agricultural Relief do not apply -- for example woodland held mainly for amenity or environmental reasons rather than as part of a trading business. Rather than exempting the value outright, it defers the charge: on death, IHT is charged on the value of the underlying land but not on the value of the standing, uncut trees and timber growing on it. When the timber is eventually felled and sold (potentially years or decades later, by the original beneficiary or a subsequent owner), IHT becomes due at that point on the net sale proceeds, using the rates and nil-rate band applicable at the time of the original death. Since the 2024/2026 tightening of Agricultural and Business Relief (including the new combined £1 million 100% relief cap), Woodlands Relief has become more relevant as a fallback for larger estates with substantial commercial woodland that no longer qualifies for full exemption elsewhere.