Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 13 February 2025 to Question 29188 on Agriculture and Business: Inheritance Tax, if she will make an assessment of the potential merits of reviewing her Department's data collection methods to enable the collection of data on the number of estates containing woodlands impacted in the 2026-27 financial year.

HMRC guidance sets out that woodland is only agricultural property, and therefore qualifies for agricultural property relief, if it is occupied with, and that occupation is ancillary to, agricultural land or pasture. It will include woodland shelter belts, game coverts, fox coverts, coppices grown for fencing materials and clumps of amenity trees or spinneys. Woodlands occupied for purposes that are not agricultural, such as amenity woodland or woodland used for the production of commercial timber, are not agricultural property. However, they may be eligible for woodlands relief or business property relief.

Executors must include the value of any timber and woodland owned by the deceased that is not part of a farm in box 69 of the IHT400 form, alongside the value of the deceased’s other interests in any business or partnership (which may or may not be related to woodlands). Some farms may also include coppices, small woods and belts of trees that shelter the land, and the value of these should be included in the value of any farm, farmhouses and farmland owned by the deceased in box 68 of the IHT400 form.

However, as stated in our answer to UIN 29188, while estates include supporting documentation about the type of assets on which they claim agricultural and business property reliefs when submitting their claims, only the value of eligible assets is digitally captured in a format available for further analysis. It is also combined with the value of other assets in the boxes mentioned above, and these may or may not be related to woodlands. As such, any further level of detail is not readily available from historic claims to estimate how many future estates might contain woodland. It would be disproportionately costly for HMRC to manually review historic claims to digitally capture this information.

As detailed in my recent letter to the Chair of the Northern Ireland Select Committee, Inheritance Tax is currently operated by HMRC using a predominantly paper-based system. As part of my work to modernise HMRC, we plan to move to a digital system.