As investment funds seeking to reduce inheritance tax pour into commercial forests in the United Kingdom, controversy is spreading over the environment and local communities. While afforestation projects are threatening habitats of rare species, critics also say vast land is concentrating in the hands of asset management firms and wealthy investors.
The Guardian, a U.K. daily, reported on the 7th (local time) that investment funds seeking to reduce inheritance tax are flowing into forests, introducing a conflict over an afforestation project underway in Todrig, on the border between England and Scotland in the United Kingdom. It said that in the U.K., particularly in Scotland, demand for forest investment is growing, fueling controversy over environmental damage and spreading concerns about land concentrating among large investors.
◇ Cut inheritance tax and grow assets… Why forests became a haven for the rich
The reason forest investment is drawing attention locally is tax benefits. The U.K. inheritance tax rate is 40% on assets exceeding a certain threshold. In contrast, commercial forests can qualify for Business Property Relief if held for more than two years. The value increase as trees grow is not subject to income tax or corporation tax, and capital gains tax is exempt at felling. The industry believes forest values have nearly doubled over the past 10 years.
Anton Baskerville of Woodlands.co.uk, a forest trading company, told the Guardian, "If you are a wealthy person considering inheritance, forest investment is worth a look," adding, "Commercially operated forests are among the most attractive tax-saving vehicles."
In the U.K., Scotland in particular is cited as a region where demand for forest investment is concentrated. Private equity magnate Guy Hands and hotel entrepreneur Julia Hands have owned tens of thousands of acres of Scottish land, and Danish retail tycoon Anders Povlsen is known as Scotland's largest private landowner. According to the Guardian, prominent British wealthy families, including the Rothschilds, are also participating in forest investment funds.
◇ "Habitats of rare species are being damaged" Residents, environmental groups push back
Todrig is one of the prime destinations for this investment boom. Spanning about 580 hectares, the area blends grassland and moorland and is home to diverse flora and fauna, including the northern brown argus, a vulnerable endangered species.
Gresham House, a London asset manager, bought Todrig in 2022 for £12 million (24.5 billion won) and pursued a commercial afforestation project. The purchase price for Todrig had jumped sixfold in just three years. In the U.K., commercial afforestation aimed at carbon sequestration and timber production has been increasing recently, with Sitka spruce, a fast-growing species, cited as a representative choice.
However, environmental groups are pushing back, saying Gresham House's Todrig project could damage the grassland and moorland that host the northern brown argus. The issue of conserving butterfly habitats has become a flashpoint, escalating into legal disputes, and as environmental authorities conduct additional reviews, the project is now undergoing reconsideration.
Camilla Fowler, chair of the local community council, said, "This kind of afforestation harms existing landscapes and replaces them with monoculture forests, undermining biodiversity." Aphitany Vaughan, a researcher at Butterfly Conservation, also noted, "Once trees are planted, the grassland disappears," adding, "It can take hundreds of years to form grasslands with the current level of species diversity."
◇ Scottish land in investors' hands… "Local communities' influence is weakening"
Environmental groups argue that this investment boom is affecting not only ecosystems but also land ownership structures. In Scotland in particular, concerns are growing that vast land is concentrating among asset management firms and wealthy investors, weakening the influence of local communities.
Josh Doble, policy director at Community Land Scotland, a civic group, said, "Gresham House has secured about 73,000 hectares of land in Scotland alone over the past 14 years," adding, "When large asset managers own land, communication and accountability with local communities can weaken."
Gresham House drew a line at the suggestion that it is a tool for inheritance tax avoidance. The company said, "Most of our investors are institutional, and they are not investing for inheritance tax benefits," adding, "The Todrig project is designed to create long-term environmental and economic value."