1. Strong annual returns
A £250,000 forestry investment provides an 8 per cent post-tax IRR over ten years – far better than AIM investments, equities and fixed income. Gresham House’s UK forestry funds have delivered an average annual return of over 11 per cent, net of fees and costs.
2. Low volatility
Between 1986 and 2022, US equities exhibited a volatility of 17 per cent, compared with just 10 per cent for forestry, despite similar growth rates.
3. IHT exemption
From April 2026, the first £1 million of qualifying business assets per person remains exempt from IHT, while amounts above the threshold receive 50 per cent relief, effectively reducing the rate of IHT to 20 per cent.
4. CGT relief
Around 70 per cent of a forest’s total value at maturity is in the timber, which remains CGT-exempt. Also, commercial woodland operations are not subject to income or corporation tax.
5. A forest is a hedge!
Forestry serves as a defensive asset, as timber prices tend to rise with inflation, making forestry an effective inflation hedge.
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6. It’s a flexible friend
The UK’s dominant commercial tree, the Sitka spruce, takes 35–50 years to mature, with a 15-year timber harvesting window. The ability to postpone harvesting allows investors to time their timber sales based on market conditions.
[See also: How high earners can reduce their UK tax bill in 2025]
7. The future looks verdant
The long-term outlook for timber demand is positive. If the government is to achieve its aim of delivering 1.5 million homes this Parliament, increasing the production and use of homegrown timber will be essential.
8. It helps the planet
Growing trees remains the most cost-effective means of sequestering carbon globally, and forestry is increasingly being considered as an important natural capital allocation.
This article first appeared in Spear’s Magazine Issue 95. Click here to subscribe
