Concerns over the government's slow response on natural capital taxation consultation
ICAS, the Association of Taxation Technicians and the Law Society of Scotland have expressed concerns over the government's lack of clarity and momentum on a natural capital taxes consultation.
In a joint letter to the Financial Secretary to the Treasury (FST), the three organisations have expressed concerns about the delay in progressing a consultation on the taxation of natural capital. It follows the consultation on the taxation of environmental land management and ecosystem service markets issued last year.
Ambiguity surrounding the tax treatment of land management schemes including the woodland carbon code and peatland code is hindering the ability of land managers to engage with a range of environmentally beneficial schemes. This affects not only the UK’s ability to achieve its net zero goals by 2050, but also has direct impact on areas such as house building, where developers have to meet obligations in respect of Biodiversity Net Gain (BNG) and nutrient neutrality before development can commence.
Justine Riccomini, Head of Tax (Employment & Devolved Taxes) at ICAS, said: "We urge the government to promptly clarify a number of tax issues in relation to this consultation. In last year's Autumn Statement, the government committed to responding to this consultation by spring 2024, however, BNG becomes mandatory in February 2024. Therefore, the government needs to take urgent action. Professional bodies and other stakeholders have been involved in policy discussions with HMRC which were progressing nicely. However, these seem to have been held in abeyance and we would encourage the government to reinstate them as a matter of priority."