Inheritance Tax Act 1984 section 208

Woodlands

Section 208 identifies who is liable to pay the inheritance tax charge that arises when trees or underwood, previously left out of account under the woodlands relief, are disposed of.

• When a death estate includes woodlands, an election can be made to leave the value of trees or underwood out of the inheritance tax calculation at that time.
• If those trees or underwood are later disposed of (whether by sale or otherwise), a deferred inheritance tax charge arises on that disposal.
• The person liable for this deferred tax is the person entitled to the sale proceeds, or the person who would have been entitled to the proceeds had the disposal been a sale.
• This means liability follows the economic benefit of the disposal rather than, for example, the original personal representatives of the deceased's estate.