Have you heard about the new forestry funding programme worth €1.3 billion that will run from 2023 to 2030?

Under the new fund, payments to landowners to plant trees will rise by between 46% and 66%,
and the payment period will be extended from 15 years to 20 years.

This fund represents the largest ever investment in forestry by the state and the aim is to plant
8,000 hectares per annum, which is the target set out in the Climate Action Plan 2021.

Minister of State with responsibility for forestry Pippa Hackett said that planting trees is one of
the most effective methods of tackling climate change and her aim is to re-engage
farmers/landowners with afforestation.

The new programme aims to deliver more diverse forest and not just conifers on marginal land.
The guiding principle is ‘the right trees in the right places for the right reasons with the right
management’. This will serve to meet a range of economic, social and environmental objectives.

Broadleaf trees generally have greater benefits for biodiversity than conifers; to that end, all
planting covered by the scheme must include a minimum of 15% broadleaves.

Native woodlands attract the highest payment rates within the afforestation scheme. As
reservoirs of biodiversity, such forests become important ecosystems, delivering significant
water and soil protection, wider habitat linkage and carbon sequestration.

Under the plan, a farmer planting one hectare of native forest would be entitled to grants of
€28,000 tax free, spread over 20 years. A new one-hectare native tree area scheme will also
make it easier for landowners who wish to plant small areas of trees on their farms.

The previous Forestry Programme 2014-2020 is now closed for applications while the new
Forestry Programme 2023-2027 is not open yet for applications. The Department of Agriculture,
Food and the Marine will open the new Forestry Programme 2023-2027 for applications as soon
as State Aid approval from the EU Commission has been received (possibly in summer 2023).

There are some very useful links and facts to be found on the https://www.teagasc.ie/crops/forestry/grants/

Five-step guide to getting started in planting trees

1.Contact your local Teagasc advisor
Start by getting in touch with your Teagasc advisor for independent advice, who can tell you if your land is suitable for forestry, how establishing a forest might impact other farming payments, and the various grant
and premium options available.

2. Make an appointment with a registered forester

We approve registered foresters to submit licence applications on behalf of landowners. You can ask them to handle the planting, establishment, and management of your forest. All paperwork at pre-planting, post-planting and at the second grant instalment stage must be submitted by a registered forester.

It is important to note that an afforestation licence is required for all new forest projects where
the area involved is greater than 0.1 hectares (approximately 0.25 acres).
We recommend contacting several companies to discuss your options and once satisfied, you can
sign a contract with the registered forester, and retain the services of a solicitor.

List of registered foresters

3.How to apply for a grant
Your registered forester will submit the application on your behalf. You will need decide at this
stage if you want your forester to look after planting, establishing, and maintaining the forest (for
the first four years) or if you wish to do it yourself.
You may need to consult an ecologist at application stage depending on the circumstances of
your land.
See a list of Native Woodland Scheme Ecologists.

4.How to get paid after planting trees and tree maintenance
Planting can begin once you receive written technical approval with an afforestation licence and
your forester has applied for financial approval.
Once completed, the first grant is payable to cover the costs associated with establishing the
forest.
The balance is paid by way of a second grant four years after planting following successful
establishment of the forest. Grant levels are dependent on tree species and soil type.

5.How to apply for a forestry premium
The first premium is payable once planting has been completed.

The forest owner is responsible for ensuring the forest is maintained in accordance with best
forest practice.
Log on to www.agfood.ie to apply online for a forest premium

For further information and guidance on forestry, follow this link –
https://www.gov.ie/en/publication/e384e-forestry-grants-and-schemes/#

One of the key benefits of forestry is – Income from the occupation of woodlands in the
State, managed on a commercial basis and with a view to the realisation of profits,
is exempt from Income Taxes for individuals and companies regardless of their residence
or domicile.

Income Tax:
In effect this means that Forest Grants, Forest Premiums, sale of forest thinning’s and sale of
clearfell are ALL exempt from Income Tax. 

Dividends paid by companies out of profits in respect of woodland income are exempt.

Capital Gains Tax (CGT):
Gains arising on the disposal of felled timber are not chargeable to CGT. In the case of disposal
of woodlands, CGT is chargeable on the lands only and not on the growing trees, subject to the
inflation adjusting factor.

Capital sums received under a policy of insurance in respect of destruction or damage of the trees
is exempt from CGT.

Capital Acquisitions Tax (CAT)
Gifts between husband and wife are exempt from CAT. A privately owned forest is liable to gift
and inheritance tax when taken as a benefit under a gift or inheritance.

Commercial forestry qualifies as agricultural property and is therefore eligible for agricultural
relief.

Stamp Duty
Any deed executed under a seal is subject to Stamp Duty, therefore a licence to cut timber is
liable to Stamp Duty.

The sale of growing timber in commercial woodlands is exempt from Stamp Duty; the sale of the
underlying land is not exempt.

Under Section 81 of the Stamp Duties Consolidation Act, 1999 land purchased by a “Young
Trained Farmer” is exempt from Stamp Duty.

As you see, the Irish Tax System looks very favourably on forestry activities. This has proved an
essential element in the expansion of the forest industry in Ireland. While legislation may
change, it is believed highly unlikely that any unfavourable changes will be made in the next 40
– 50 years. This is the length of time estimated for Ireland to attain the target levels of forest
cover set out in the Strategic Plan for the Development of the Forest Industry in Ireland –
Growing for the Future.

https://swsforestry.ie/investment-land-sales/taxation/

Capital Acquisition Tax (CAT)
Capital Acquisition Tax (CAT) is a tax on gifts and inheritances. You may receive gifts and
inheritances up to a set value over your lifetime before having to pay CAT. The parent to child
tax free exemption is €335,000, a subsequent tax rate of 33% can apply.

You can claim Agricultural Relief on gift or inheritance of farmland including woodlands, if you
qualify as a farmer. This relief reduces the taxable value of the property, including land, by 90%.
To qualify as a farmer, 80% of the recipient’s assets must be in agriculture and forestry on the
valuation date. This means that a forest with a market value of €100,000 is valued at €10,000 for
tax purposes. If you inherit or receive a gift of a woodland that does not qualify for Agricultural
Relief, it may qualify for Business Relief.

So from a social aspect, an income generating aspect and a wealth building and transferring
opportunity, forestry has now been very much put centre stage.

If you have agricultural lands that you are considering disposing, we at Mannix Property
Services would be delighted to assist you in the process. Give us a call for a no obligation chat
and valuation. 066 716 3853