UK fiscal changes and new forestry planning

The taxation and grant arrangements for UK forestry were radically changed in April 1988. This paper considers the consequence of these changes for new forestry investment in Scotland by examining five models which describe different site types. The investment appraisals show that after April 1988 forestry will no longer be of interest to investors seeking a tax shelter or wishing to invest borrowed capital. Acceptable real returns to capital will be found only on relatively good quality sites. A major reduction in the rate of new planting is indicated and a shift away from poorer planting land. The rate and location of new planting will depend critically on farmland prices and the extent to which better-quality land is released for planting under the normal consultation procedures.