Investing in UK commercial forests can offer stable and predictable returns, backed by freehold or long leasehold interests. Forests are uncorrelated to other asset classes and have low volatility, as well as offering a good opportunity to generate capital growth.
An investment in Forests not only qualifies for Business Relief after two years, but all timber sales are also free of Income Tax and Capital Gains Tax – making it a proven tax-efficient asset class for both private investors and business owners. Investors will also gain access to a sector which typically requires a more significant capital outlay.
The long term annual return from forests has been almost 10% per annum over the last 25 years, illustrating the steady returns of this asset class – and significantly, there has been no negative growth during this period. Investors should be aware however that the return from forests is not linear and will reflect the crop age and composition, but we will arrange for an independent biannual valuation of each forest.
All of our commercial forests are located in the UK, with the majority in Scotland and a small number in Wales. The predominant crop species is Sitka spruce, which is the most commonly planted conifer in the UK, and we typically acquire woodlands which are approximately halfway through their 35 to 40 year life cycle on average.
The investment return comes primarily from the physical tree growth – and if a Sitka spruce takes 40 years to grow before harvesting, then broadly the growth is equivalent to 2.5% per annum. This growth is supplemented by inflation on the price of harvested timber, and land price inflation due to the increasing size of the trees growing upon it.
We target woodlands which are capable of outperforming the IPD UK Forestry Index over a period of around ten years – and this showed an annualised return of 9.2% to 31st December 2017, calculated since launch in 1992.
A forestry partnership acquires the freehold, or long leasehold, interest in each plantation with full title at the Land Registry. It then enters into a contract for services with our specialist manager, and the management team are employed directly by the partnership.
Any specialist work such as harvesting and replanting obligations are put out to tender as and when required.
Download our Investment Sector overview
Meet our Investment Manager
Anthony’s career in the UK Forestry Industry began in the 1970s – almost since new privately-owned upland forestry began, with the stimulus of income tax incentives in the 1960s. As Marketing Director of Economic Forestry Limited during the 1980s, he was responsible for stimulating interest in tree planting among successful entrepreneurs, until tax rules were changed in the 1988 budget.
Forestry Investment Consultancy Ltd. was created to provide investment advice in respect of Reinvestment Relief from Capital Gains Tax, until this was abolished in 1998 Finance Act, and to promote inheritance tax advice applications – which have grown to be a major stimulus to investment in UK woodlands.
During the first decade of the new century, Anthony diversified into other investment areas with Close Brothers, a listed investment bank, before returning to his Dorset home to concentrate upon providing a personal investment service to those wanting to invest in UK forests, for long term tax planning.
Today, Forestry Investment Consultancy Ltd. manages 18,830 acres of UK forestry in 37 forestry estates – working closely with the forestry owners to handle all administration, management decisions, harvesting and planting operations.