The government is seeking views on the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax.
As announced in the spring budget, elements of the tax treatment of ecosystem service markets and environmental land management will be explored.
A call for evidence has launched on the tax treatment of the production and sale of ecosystem service units, to understand the commercial operations and the areas of uncertainty in respect of taxation.
The government's consultation, which closes on 9 June, also seeks views about the scope of agricultural property relief from inheritance tax.
Its aim is to explore the extent to which the current scope of agricultural property relief may represent a barrier and, if necessary, potential updates to the scope of the existing land habitat provisions in the relief.
The government said it would also explore in more detail a recommendation in the recent Rock Review of tenant farming in England to restrict the application of 100% agricultural property relief to longer tenancies of 8 or more years.
Responding to the consultation, the Country Land and Business Association (CLA) said it had campaigned 'extensively' to change the definition of agriculture in the tax system to include ecosystem services.
"It is vital to give farmers and landowners the confidence they need to engage with environmental delivery, improving biodiversity and carbon sequestration," said CLA president Mark Tuffnell.
"Without this change, we will see a perverse outcome whereby forward thinking, nature friendly farming will be punished by the tax system.
“This change would also serve to encourage farmers to look afresh at entering into Environmental Land Management schemes (ELM).
"For all the challenges faced by transitioning away from the old EU schemes, ELM has laid a path that is worth walking, and we encourage farmers to look very carefully at them.”
Those interested in offering their views to the consultation can email personaltaxconsultations@hmtreasury.gov.uk.
