Habitat banks creating a net gain for English farmers

Planting has begun on a farm in Buckinghamshire as part of a nationwide scheme to restore nature through biodiversity net gain (BNG). We talked to landowner Joseph Soul about his involvement in the privately funded Environment Bank scheme, which is already providing an alternative income stream for him and many others.

Environment Bank is the UK’s market leader specialising in biodiversity net gain (BNG) units. Under the Environment Act 2021, BNG will be mandatory for new developments and infrastructure projects from November this year. It is working with a range of farmers and landowners across England to identify parcels of land (typically upwards of 20ha in size) where a signi cant uplift in biodiversity can be made through creating habitat banks.

Currently, habitat creation is happening at quite a pace. There are 20 sites underway and an additional 60 scheduled to commence over the year ahead.

Planting the seed

One such site is in Milton Keynes where planting has begun on a 38ha site nestled between existing forests and an ancient woodland. Wood Farm in Emberton is owned by Joseph Soul (pictured above). Joseph was looking to diversify the income of his farm by creating high-quality, landscape-scale habitats including neutral grassland, lowland meadow, hedgerows, and dense scrub. He already has a campsite on his land, so he was eager to diversify in a way that would complement this business enterprise and yet still work alongside crop cultivation and grazing.

Environment Bank works with landowners and farmers to ensure that their land is converted in a way that will bene t their needs as much as the needs of nature. In Joseph’s case, it was considered that a greater range of nature would increase the quality of the land, create a better landscape to visit whilst ensuring long term business viability through numerous income streams.

He said: “I have worked throughout the process with a team of expert ecologists who seem to have no end to their knowledge. As much as I know my land, they know exactly which species and habitats will bene t its unique needs and increase its quality for years to come.”

This restoration project will be fully established over the next 10 years, and it will be subject to continuous monitoring and support from Environment Bank’s team of expert ecologists throughout this period. It will then be maintained and managed for a minimum of 30 years by Joseph to generate income for a xed term and potentially beyond.

About habitat banking

The concept of habitat banks was pioneered by prominent ecologist Professor David Hill CBE, one of the founding members of Natural England. His team are now working with farmers and landowners across England, tapping into thousands of hectares of land to restore our natural habitats. Environment Bank says its work is pivotal to the achievement of the government's ambitions for nature recovery and a net-zero future.

Habitat banks need to be secured on land for at least 30 years, prior to the November 2023 legal requirement of the Environment Act 2021 deadline that all planning permissions granted in England will have to deliver at least 10% biodiversity net gain.

Since launching its multi-awardwinning habitat bank scheme last year, Environment Bank has seen enquiries soar, and it is looking to establish over 2,000ha of habitat banks over the next few years.

In return for managing the habitat, farmers and landowners receive funding for a minimum of 30 years. This opens up a new avenue of welcome economic yield for many rural communities, who have struggled nancially with Brexit in recent years, and now, the cost-of-living crisis.

Financial bene ts

A crucial bene t of Environment Bank establishing a habitat bank for farmers is that they retain ownership of the land, with Environment Bank taking a lease interest. The management plan is tailored to suit the landowner’s existing land management strategy and sources of funding, as well as ensuring the most tax-e cient solution.

Environment Bank pays up to £27,000 per hectare over a 30-year period with xed annual uplifts to counter in ation for the management and lease of the land, as well as a generous welcome bonus. Being already fully funded, Environment Bank typically arranges lease and management payments within 20 weeks of registration, and covers all costs for establishing and managing the habitat banks, extending to legal and tax advice where appropriate. It has a ready-made solution, so unlike brokerage models, farmers do not have to manage the complex implementation process or take any of the risk of the scheme failing. All of that sits with Environment Bank.

To talk about creating a habitat bank on your land, contact Environment Bank directly or visit www.environmentbank.com for further information. FG

Potential tax impacts of diversification

As farmers continue to be encouraged to diversify their businesses, as well as making decisions on what the diversi cation will involve, there are also the hurdles of local planning and funding constraints. Not to be forgotten are the potential tax impacts of the diversi cation and early thought should be given to these, advises Ensors agricultural consultant Graham Page (pictured).

partnerships, but extraction of funds for the proprietors’ own needs will impact on the overall tax charge of the operation and will need some careful planning.

Farm holiday lets proving a popular choice with the public

to these taxes is considered. Many

Salter & Mckenna has undertaken a number of projects providing accommodation on farm; these include, holiday lets, shing and shooting lodges. These are proving to be very popular with the public and provide a very good source of income.

The mode of operation needs to be considered. Many diversi ed enterprises are administered through limited companies that are created either from the outset or after the early years of operation.

Despite the imminent increase in corporation tax rates, limited companies generally pay a lower rate of tax on their pro ts in comparison to sole trades or a trading considered the lines of an

Capital Taxation is another important area covering both Capital Gains Tax and Inheritance Tax. Generally, the exposure to these taxes is reduced where the diversi cation consists of conducting a trading business, as opposed to rental generation which is considered more along the lines of an investment activity.

Finally, VAT will need some thought. Diversi cation can create some signi cant issues over recoverability of VAT and the competitiveness of pricing of the end product, but with careful planning the financial effects can be minimised. FG