Incorporating biodiversity net gain into your succession planning

Biodiversity net gain succession

Biodiversity net gain (BNG) regulations might only have just come into force but, for those landowners that are considering it as a source of income, it stands to impact the next generation. Here’s what you need to know:

What is biodiversity next gain?

Biodiversity Net Gain (BNG) is a requirement for developers to enhance the natural environment and ensure a net increase in biodiversity as part of their development proposals.

This commitment seeks to minimise ecological impact on development projects and emphasises leaving the environment in a better condition than before.

Habitats enhanced off-site by landowners for BNG need to be maintained for 30 years.

How does BNG impact succession planning?

Given the considerable time period over which BNG agreements last, it is likely that the requirements will play into the plans that landowners might have for the future of their holdings. To ensure that the long-term commitment is in the best interests of both yourself and your next generation, make sure you plan ahead:

  • Start the conversation: Think about succession planning well in advance and talk to your intended successors early in the process to discuss your views and goals for the site and how that compares to their views on the future. With BNG agreements;
  • Pick your scheme and payment plan wisely: There are a number of ways in which landowners can financially benefit from BNG enhancements. Payments can be made in a single lump sum or in incremental payments so make sure your conversations with the next generation factor this in. Similarly, landowners can maintain ownership and maintenance of the land providing the BNG enhancements or use a third party to manage the enhancements under a 30 years lease for example;
  • Ensure wills and other agreements factor in BNG: As a legal agreement, once signed whoever operates the land hosting the habitat is required to maintain it. Succession plans need to consider the potential for changes in the line of succession and having your will dictate how your land is passed down and how it must be used will protect the business;
  • Tax: The law surrounding tax is highly complicated and subject to change. Tax treatment (income tax or capital gains tax) of proceeds from the sale of biodiversity units will need to be considered carefully; and there are still considerable questions over whether land used to deliver BNG enhancements will be subject to inheritance tax. Obtaining tax advice is critical to ensuring successful outcomes for these BNG schemes;
  • Prepare the next generation: By getting your succession plan in place as early as possible, time can be given to equipping successors with knowledge, skills and awareness on all aspects of the family business, assets and commitments, including around BNG to give them the momentum to thrive when they are given control.

Karen Perugini, Partner in the Thrings Private Client team, said: “Succession planning is complicated, with so many moving parts and important decisions needing to be taken but with enough care and attention early on, they can help businesses to thrive even once you step away.

“Long-term commitments, such a biodiversity net gain agreements, need to be factored into this plan and care needs to be taken to ensure not only that jumping into an agreement is the right decision in the moment, but is in the best interest of the business in years to come.”

Biodiversity Net Gain will be the focus of Thrings’ upcoming seminar being held at its Romsey office on Wednesday, 6 March with a range of experts speaking about the legal, environmental, financial and planning impact. To find out more about the event and how to book your place, click here.

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