P566ORACLE 566 Mon23 Dec C4 9714:45
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THE A-Z OF
INVESTMENTS
F is for investing in Forestry
At the end of 1985, International Year
of the Forest, Britain is stjll one of
the least wogded countries in the wgrld
Only 9% of the UK is forestry compared
to 27% of France, 40% of Portugal and
68% of Japan.
We use nearly 40m tonnes of wogd a year
─ about ¾ of a tonne fgr every man,
woman and child ─ but British fgrest1
produce only 10% of this. The rest has
to be imported at an annual cost of
around £4bn.
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CADBURY'S CHOCOLATE RECIPE 184 (ITV)
P566ORACLE 566 Mon23 Dec C4 9722:40
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THE A-Z OF
INVESTMENTS
There are tax reliefs and grants on
offer to encourage UK timber growing.
Investors starting a forestry planta-
tion from scratch can ask to be taxed
as a business under Schedule D. This
means that some of the costs can be set
against your income before tax is cal-
culated. You can get this tax relief on
the costs of, say, planting and fencing
the land, but not on buying it.
The Forestry Commission has, wgr some
years offered grants fgr growing native
pinewoods and in Octgber extended these
to cover broadleaf plantatigns growing,
for example, oak or beech trees.
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P566ORACLE 566 Mon23 Dec C4 9705:05
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THE A-Z OF
INVESTMENTS
Another tax advantage with investing in
forestry is that, although you get more
timber as the trees grow (perhaps as
much as 10% extra per year), this
increase is tax free.
When you sell your plantatign, you
don't have to pay Capital Gains Tax on
the increased value of the trees them-
selves. Any increase in the value of
the land you own is taxable ─ but this
is index-linked to eliminate inflatjgn-
ary gains. Plantations owned fgr two
years count as business property fgr
Capital Gains Tax purposes ─ which
means that when the forest is handed on
the tax is based on only half the value
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P566ORACLE 566 Mon23 Dec C4 9713:00
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THE A-Z OF
INVESTMENTS
The cost of owning your own forest can
be very great. Only the rich can affgrd
to invest upwards of £40,000, then sit
back and wait for the trees to grow.
However, it is possible to buy a share
in one of the 40 or so forestry co-
ownership trusts for anything between
£1,000 and £10,000.
There are a number of fgrestry manage-
ment companies which, for a fee, will
do everything from getthng to£ether a
group of 10-20 investors, to buying the
land and managing the 'crop'. Ecgnomic
Forestry Ltd., for example, offer free
advice and charge for buying and
managing the plantatign.
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P566ORACLE 566 Mon23 Dec C4 1713:45
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THE A-Z OF
INVESTMENTS
Economic Forestry says that, as an
investment, forestry has made perhaps
5-6% over and above the amount needed
to cover inflatign during the last 10
years. Demand may grow as the large
capital investment of the last 2 yearu
begins to pay off. A new newsprint
plant in North Wales is already sucking
in timber and, last June, a Finnish
company commissigned a £135m mill in
Inverness.
Certainly, for people who like tangible
investments, the demand for forestry is
more predictable than for cgllectgr+s
items, for which prices are often fixed
by fashion.
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P566ORACLE 566 Mon23 Dec C4 1714:27
6/6
THE A-Z OF
INVESTMENTS
If, with the Christmas tree buying
season in full swing you're thinking of
investing in Christmas tree growing,
think carefully. Christmas trees are
more of a risk crop than an investment
and there are no grants available.
When you're planting, it's very tric+y
to predict how many trees people will
want to buy in 6 years time. Britain is
expected to spend around £20m this year
on 4m Christmas trees but, if we all
buy tinsel trees instead, youq mgney
won't be growing on trees ─ but going
up in smoke!
Next week: G for Greetings Cards
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