In Scottish law, it has long been accepted that standing timber is treated as a fixture (i.e. part of the ground on which it is growing) and therefore chargeable for Stamp Duty Land Tax (SDLT) purposes.

However, towards the end of 2013, HMRC issued conflicting guidance, advising that if, immediately before and immediately after the purchase, the land is used commercially with the intention of felling the trees, SDLT will only be charged only on the value of the underlying land and not on the value of the standing timber (the trees being treated as a separate moveable crop).

It is understood that following this advice, HMRC received a flood of applications to reclaim overpaid tax. HMRC then reconsidered the position and sought advice on the matter, leading to a U-Turn. Please note, for the avoidance of any doubt, SDLT must be paid on the standing timber on the purchase of commercial forestry. Only cut timber can be regarded as moveable and discounted for SDLT purposes. Confirmation to this effect can be found in HMRC's Stamp Taxes Bulletin 2/2014.

It is assumed that this will continue to be the position under Land and Buildings Transaction Tax which replaces SDLT in Scotland with effect from April 2015.

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