Now is an exciting time for the forestry and wood-processing sector in Scotland. The Scottish Government's annual planting targets of 10,000 hectares of new woodland, rising to 15,000 hectares by 2024-25, are ambitious and reflect an attempt to counteract the future impact of the low levels of tree planting across the United Kingdom since the early 90s. The new Scottish Forestry Act should ensure that the legal framework can properly enable and support what is already a modern and dynamic industry. The Act allows for the continuous development of a forestry strategy to deal with the requirements of the industry and wider society.

The planting targets can only be met through a broad range of planting schemes. The specific mix of native broadleaves and conifers is always a point of negotiation during forest design, with forest managers and landowners generally looking to maximise the coverage of sitka spruce, the fast-growing conifer favoured by the processing industry and end-users such as the construction sector.

Large-scale mixed planting schemes have become more common in recent years. The strong forestry sector has led to an increase in land prices for sites that can support a commercial forest, prices that cannot be matched by those looking to make a return from upland sheep farming. These large schemes have not been as prevalent in the North East as in other regions but farmers all over Scotland have been engaging in farm-scale tree planting, attracted by the grants, wider land benefits and tax-free income from harvesting.

By its very nature forestry is a long-term and slow growing asset but it is important that any planting scheme is properly planned. There are the obvious practical considerations of planting on suitable ground in a location that is not overly at the mercy of the elements and which enhances, rather than impedes, other farm activity. These are all issues that a good forestry advisor will reflect in the design. However the ability to remove timber in 30-40 years' time also needs to be carefully considered. If access is taken over a neighbour's land you will need to consider whether the access rights enjoyed are sufficient not only for the forestry use, but also to permit road upgrading and widening that is likely to be needed before any harvesting operation. Any regularisation of the title position will be much easier (and cheaper) to deal with when the site is bare land, as compared to waiting until there are 50 acres of mature sitka spruce.

The tax treatment of commercial forestry and timber is one of its attractions as an investment class and a commercial forest of any size can form an important part of any tax planning or succession planning exercise. However, woodland that is not managed as a commercial crop will not qualify for Business Property Relief for inheritance tax and in some circumstances changing land from agricultural to woodland may have unintended tax consequences for a landowner or their successors.

Someone who is in a position to plant trees on part of his or her land can reap several benefits from that but it is important that they have a good advisory team of forest manager, accountant and solicitor and take appropriate advice at an early stage.

Graeme Leith is a Managing Associate in the Land and Rural Business Team at Brodies LLP, with offices in Aberdeen, Edinburgh, Glasgow and Dingwall.

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