Sitting on the Woodland Fence?
- Oakbank Team
- May 4
- 5 min read
Updated: May 5
The publication this month of a joint survey by Confor, Royal Forestry Society (RFS) and Country Land and Business Association (CLA) has put woodland owners squarely in the spotlight. Its findings make for interesting reading: almost half of the 204 respondents expect to be affected by the April 2026 changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) and nearly 60% say they are now less likely to plant new woodland as a result. Apparently, some have already cancelled planting proposals. The lobbying case is being made loudly and capably by others. What I want to address here is a different question: given everything that has changed, is tree planting still worth it?
My answer, for most holdings, is yes. But, as ever, not unconditionally and not without working through the numbers.
The policy backdrop has shifted
Before we get to trees, it is worth being honest about the wider agri-environment scheme landscape, because the case for woodland creation does not stand or fall on IHT alone.
SFI closed abruptly last year when its budget ceiling of £1.06 billion was reached. The relaunched SFI 2026, opening in two windows, June and September, comes with a £100,000 annual agreement cap. For many larger holdings that previously had, or currently have, agreements above that cap, this represents a real reduction in scheme income, regardless of what is happening from a tax perspective.
Countryside Stewardship (CS) Mid Tier agreements that began in 2021 have largely been extended to 31 December 2026. When those and 2022 agreements end (and there are over 10,000), the expectation is that SFI 2026 becomes the primary successor, but at lower payment rates, with missing actions and subject to a budget that remains ... finite.
Countryside Stewardship Higher Tier (CSHT) remains available for targeted woodland management, habitat restoration and protected sites, but it is selective, slower to access and focused on nationally significant outcomes. For eligible holdings, CSHT will form an important part of a mixed scheme portfolio, but it is not a like-for-like substitute for expiring agreements across the wider holding.
The practical question for anyone with land potentially coming out of a scheme, or already not in a scheme or another use at an economically meaningful rate, is: what now? That is the question for which trees, for some, can be the answer. Not as a refuge from taxation, but as a considered long-term land use with its own commercial logic.
Financial case for planting woodlands
England Woodland Creation Offer (EWCO) remains open and is not subject to an agreement cap of the kind now constraining SFI. The offer rests on three pillars: capital funding, long‑term maintenance and optional private income streams. Capital costs of establishment are funded at up to £10,200 per hectare for standard items, effectively 100% of the national average cost. Maintenance payments run at £400 per hectare per year for 15 years. On top of that, additional contribution payments of up to £12,700 per hectare are available where the woodland delivers wider public benefits: water quality improvement, flood risk reduction, nature recovery, recreational access and a premium for planting on low-sensitivity land. For the right site, in the right location, the total grant package can be substantial. Please note that EWCO applications for autumn 2026 planting ought to be submitted by the end of May, as they typically take three to five months to process.
Beyond grants, two further income streams deserve consideration. The Woodland Carbon Code provides a verified mechanism for generating carbon credits from new woodland, which can be sold forward or held for future sale. This is a long-term income stream but for a landowner with a multi-generational view, it is real and growing. The second stream is Biodiversity Net Gain (BNG), mandatory for most planning applications in England since 2024 and due to extend to Nationally Significant Infrastructure Projects (NSIPs) from November 2026. Woodland scores well in the statutory biodiversity metric, particularly higher-distinctiveness native woodland types. Enquiries for BNG units from landowners were reported to be up over 200% in early 2026 compared with a year earlier. However, I would urge caution: the market is still maturing and prices for some habitat types are softening as supply increases.
But consider EWCO, the Woodland Carbon Code and BNG carefully, on the right parcels, and the financial case can be compelling.
The "eco-commercial" case
A case built purely on grants and potential carbon credits is a relatively thin one. The stronger argument for trees in the right place is that they can genuinely improve the productive and ecological performance of a holding.
Shelter belts and farm woodland can reduce livestock stress, cut heating costs in housed systems and meaningfully improve lamb and calf survival in exposed situations. These effects are well-documented but rarely costed properly at farm level. Riparian woodland protects watercourses, reduces diffuse pollution risk and can reduce exposure on flood-prone ground. Agroforestry, including silvoarable and silvopastoral systems, remains within the SFI 2026 offer at supported payment rates, and the evidence base for productivity benefits alongside environmental delivery is growing.
From a sporting estate perspective, well-positioned woodland blocks, designed for biodiversity, shelter and connectivity rather than simply maximum stocking density, can add long-term value.
Local Nature Recovery Strategies are being developed across England. Woodland that is positioned within or adjacent to identified recovery areas potentially attracts higher BNG unit values and stronger alignment with future policy direction. Landscape-scale connectivity, linking woodland blocks, hedgerows and watercourses, is increasingly what the powers that be and those that pay want to see, and what some programmes are designed to reward.
What has changed and what has not?
I do not want to dismiss the IHT concern. For a woodland-heavy mixed estate where combined APR and BPR values exceed £2.5 million per person, the new regime genuinely changes the succession calculation, and the Confor/RFS/CLA survey is right to document that. Forestry is different from most other business assets: it is high-value, low-income, subject to a legal restocking obligation and often managed across timescales that span generations before meaningful income is realised. The survey's proposal for a reformed Woodlands Relief - deferring tax until the woodland is sold - is a sensible ask, and one I would welcome Government taking seriously.
But for a farmer or estate manager considering adding new woodland to a predominantly arable or mixed livestock holding, the IHT picture is unlikely to be the deciding factor in isolation. Standing timber takes decades to accumulate value. Before allowing IHT anxiety to cancel a planting scheme, it is worth understanding your actual exposure.
What are the next steps?
Get good advice before making a planting decision. The position varies significantly by ownership structure and asset value, among other things.
Review your land use options and likely scenarios well before any existing agreement is due to end. Some of your parcels may be best placed under EWCO than back into SFI.
EWCO applications for autumn 2026 planting ought to be submitted by end of May. Processing takes three to five months. If you are considering planting this year, get in touch with us as soon as possible.
Consider the long view. Trees planted in 2026 will still be standing and delivering value in timber, carbon, biodiversity and sporting terms long after the current political cycle has run its course. Policy changes. Well-placed woodland offers stability.
Note that to qualify for BPR, the woodland must be managed on a commercial basis. Necessary evidence includes felling licenses or a woodland management plan (WMP) and, ideally, active management and a clear profit motive, better identified in a WMP.
At Oakbank, our woodland advisors work with farmers and estates on woodland creation planning, EWCO applications and the integration of tree planting with game management and natural capital objectives. If you are weighing up whether a planting scheme makes sense for your holding, get in touch.
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