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This commentary reviews the tax position of a farmer who is selling land for development and plants trees on the land to achieve the planning permission. Many farms are selling off small areas of land and buildings for development projects. As part of the development deal that is negotiated with the local council, the promoter can agree that the farmer must plant a certain number of acres of trees on existing farmland. Sometimes this is located away from the project.

The tax treatment of the cost of tree planting and maintenance is a potential dilemma regarding the exact facts and timings. It is assumed by many tax advisers that the physical cost of the tree planting is correctly allowable as a CGT cost against the development gain, but this should be checked. However, the tax question also arises as to the future cost of the maintenance over the next 30 years (spraying around the trees, controlling brambles, thinning etc). There can be some replanting costs for lost trees. This cost often falls into another tax year to the