Back in Mexico City, a city whose scale I sometimes forget, I attended the close of NAT5 Live 2026 at the invitation of Antonio Navalón. For families with capital in the United Kingdom and land or interests in Latin America, and for the funds that manage their money, the questions it raised are tax questions.
From ratings to audited disclosure
Nat5 Nature Positive brought capital and regenerative projects into the same room with a modest aim, a nature positive economy that works on a balance sheet. Its starting point is the move from voluntary ESG ratings to audited nature disclosure under the Corporate Sustainability Reporting Directive and the TNFD recommendations.¹
Its answer to greenwashing is certification. Biodiversity credits are issued under the Ases On Chain Protocol (aOCP), each backed by identified species monitored by satellite. They are sold through Nat5’s own marketplace to buyers who want to fund regeneration. Landowners and communities receive an income for protecting land, and buyers receive a traceable asset that an auditor can test.
On Nat5’s figures, Latin America holds around 40 per cent of the planet’s biodiversity and receives about 4 per cent of climate finance. It is one of the most practical standard setting initiatives I have seen in decades.
Pricing what nobody prices
Some families come to this through the Good Ancestor Movement, founded in 2021 to help clients direct their wealth to causes such as grassroots movements, affordable housing and climate resilient projects. Others come through risk management or succession planning. Whichever route a family takes, whether a family office, a trust, a fund or a landed estate buys a credit depends on how UK tax law classifies the purchase.
UK Tax and the environment
Parliament has not been shy of using the tax system for environmental ends. Companies may deduct 150 per cent of qualifying expenditure on cleaning up contaminated or derelict land.³ New zero emission cars and electric vehicle charge points have attracted 100 per cent first year allowances, and companies may fully expense new plant and machinery.⁴ The installation of energy saving materials in homes is zero rated for VAT until 31 March 2027.⁵
The closest precedent is the Landfill Communities Fund. Landfill operators may claim a credit against landfill tax worth 90 per cent of their contributions to enrolled environmental bodies. Qualifying projects include the conservation of biological diversity through habitat restoration and the recovery of species, provided the project lies within 10 miles of a registered landfill site.⁶ Scotland will close its equivalent fund to new contributions from 1 April 2026, because falling landfill revenues have made it unsustainable.
The venture capital reliefs point the other way. Farming, forestry and electricity generation are excluded activities for the Enterprise Investment Scheme and venture capital trusts. Social Investment Tax Relief closed to new investment in April 2023.⁷
The result is that the tax code gives a 150 per cent deduction for cleaning land after it has been contaminated and a 90 per cent credit for a wildflower meadow within ten miles of a landfill site. It gives nothing for a monitored forest that keeps its species alive. The environmental logic is applied by postcode.
A family trading company may deduct expenditure incurred wholly and exclusively for the purposes of its trade, provided the expenditure is revenue and not capital.⁸ A manufacturer buying certified credits for a cloud forest in Oaxaca can expect an inspector to ask what trade purpose the forest serves. A family investment company has no trade, and its relief for expenses of management is unlikely to extend to biodiversity credits.⁹ An individual buying credits directly obtains no relief at all.
Treated as a gift, the purchase fares worse. From April 2024, charities outside the UK no longer qualify for UK charitable tax reliefs. The government’s stated reasoning was that, having left the EU, UK taxpayer money should support UK charities.¹⁰ A will leaving a legacy to a Mexican or Colombian conservation body has lost the inheritance tax exemption. The United Kingdom’s population of jaguars is, regrettably, small.
A UK charity may still fund charitable work anywhere in the world. Donor advised funds in the UK are established by registered charities, so legacies to them keep the exemption. That route depends on the charity’s objects and its trustees’ discretion, not on the certification of the project.
Private trustees face a separate constraint. Cowan v Scargill [1985] Ch 270 requires trustees to put the financial interests of beneficiaries first. Charity trustees have more room under Butler-Sloss v Charity Commission [2022] EWHC 974 (Ch) and section 292A of the Charities Act 2011.¹¹ A family that wants its trust to buy credits should say so in the trust instrument.
Land, estates and inheritance tax
Since 6 April 2025, agricultural property relief has extended to land managed under environmental agreements with the UK government, public bodies, local authorities and approved responsible bodies. From 6 April 2026, 100 per cent agricultural and business property relief applies only to the first £2.5 million of combined qualifying property, with 50 per cent relief above that figure.¹² The environmental management agreement must be made with a public authority, or with a body acting under arrangements with one. A private credit marketplace does not meet that condition on its own.
Agricultural property relief now applies only to agricultural property in the United Kingdom.¹³ Since 6 April 2025, an individual resident in the United Kingdom for at least ten of the previous twenty tax years is within inheritance tax on worldwide assets.¹⁴
Consider a long term resident who holds a ranch in Colombia under a conservation agreement. The ranch bears inheritance tax at 40 per cent of its value, with no agricultural property relief. A neighbour farming in Norfolk under an environmental agreement pays nothing on the first £2.5 million.
At home the reliefs are generous. Conditional exemption is available for land of outstanding scenic, historic or scientific interest. Profits from commercial woodland fall outside income tax, and inheritance tax on growing timber may be deferred. Gifts to UK charities are exempt from inheritance tax, and the rate on the rest of the estate falls from 40 to 36 per cent where at least 10 per cent of the baseline amount passes to charity.¹⁵
The open question is the sale of nature units by UK landowners. When the agricultural property relief extension was confirmed, HM Treasury and HMRC set up a working group with industry to resolve the taxation of nature markets. The income tax and capital gains tax treatment had not yet been settled.
Private equity and the City gain from Nat5
Mexico, Colombia and South Africa already allow certified carbon credits to be set against carbon tax liabilities.¹⁶ Extending that offset to certified biodiversity credits would turn a voluntary purchase into a tax position that can be quantified, assured and reported. It would also take the discussion beyond carbon offsetting and beyond greenwashing.Fund managers selling to UK private clients are bound by the FCA’s anti greenwashing rule, in force since 31 May 2024. The rule requires sustainability claims to be fair, clear, not misleading and capable of substantiation. Managers are also subject to the Sustainability Disclosure Requirements and investment labels.¹⁷
A fund using the Sustainability Impact label must show a measurable contribution to a positive environmental outcome. A credit backed by named species under satellite monitoring is evidence a supervisor can read. Funds domiciled in Luxembourg or Ireland and marketed to UK families as Article 8 or Article 9 products under the Sustainable Finance Disclosure Regulation need the same evidence.¹⁸
For private equity, nature dependency belongs in the diligence report. A coffee exporter in Chiapas, a beverage group drawing on Colombian aquifers or a hotel portfolio on the Riviera Maya each carries water, soil and biodiversity risk. That risk affects insurance, financing terms and exit value. The TNFD LEAP method lets a sponsor map it. Certified credits let the sponsor fund restoration it can report to limited partners, many of them family offices and endowments that now ask for that information.
For the City, Nat5’s credits sit on a ledger. The Property (Digital Assets etc) Act 2025 came into force on 2 December 2025. It confirms that a thing may be the object of personal property rights although it is neither a thing in possession nor a thing in action. The Law Commission work behind the Act considered carbon credits among the assets concerned.¹⁹
English law therefore offers a proprietary basis for holding, charging and transferring tokenised nature credits, with remedies such as freezing injunctions when they go astray. London’s custody, insurance, listing and arbitration services can follow.
Tax certainty is the missing element. A fund cannot price an asset when its corporate buyers have no assured deduction and its landowning sellers face an uncertain tax treatment. However, there are things families can do.
- Route international giving through a UK charity or donor advised fund whose objects cover conservation abroad.
- Review wills drafted before April 2024 that name charities outside the UK.
- For UK land, model environmental agreements with public authorities against the £2.5 million allowance, which is transferable between spouses and civil partners.
- For Latin American land, measure the inheritance tax exposure under the long term residence test alongside the local regime.
- For family offices investing through funds, ask each manager what evidence supports each impact claim.
- Hold any credits the family buys with an assurance report under ISAE 3000 (Revised) or ISSA 5000.²⁰ That record supports a claim if the law changes, and it answers heirs who ask what the money achieved.
Some thoughts from London
Parliament could legislate a revenue deduction for certified nature credits bought by a trading company. The deduction would be conditional on independent assurance and on public disclosure of the credits retired.
It could create a nature communities credit on the model of the Landfill Communities Fund. The credit would be set against corporation tax and would follow certification rather than proximity to a landfill site.
It could grant relief for certified projects abroad, including inheritance tax relief on conservation land held by long term residents. That relief would turn on the certification standard and the assurance report rather than on location. The jaguar would then qualify on evidence, not on domicile.
It could also settle the income tax, capital gains tax and inheritance tax treatment of nature units sold by UK landowners. A farmer in Cumbria, a community in Chiapas and a fund in Mayfair would then face rules a lender can read.
The European Union and the United States face the same choice for their own taxpayers.
Should a certified hectare of cloud forest receive less favourable tax treatment in a family’s estate than a pond within ten miles of a landfill site?
Notes
- Directive (EU) 2022/2464 (Corporate Sustainability Reporting Directive); TNFD Recommendations (September 2023).
https://eur-lex.europa.eu/eli/dir/2022/2464/oj
https://tnfd.global - Corporation Tax Act 2009, pt 14.
https://www.legislation.gov.uk/ukpga/2009/4/contents - Capital Allowances Act 2001, ss 45D, 45EA and 45S.
https://www.legislation.gov.uk/ukpga/2001/2/contents - Value Added Tax Act 1994, sch 8, group 23, as inserted by SI 2022/361 and amended by SI 2024/24.
https://www.legislation.gov.uk/ukpga/1994/23/contents - Finance Act 1996, pt III, and Landfill Tax Regulations 1996 (SI 1996/1527), pt VII.
https://www.legislation.gov.uk/ukpga/1996/8/contents - Income Tax Act 2007, ss 192 and 303 and pt 5B.
https://www.legislation.gov.uk/ukpga/2007/3/contents - Corporation Tax Act 2009, ss 53 and 54; Income Tax (Trading and Other Income) Act 2005, ss 33 and 34.
https://www.legislation.gov.uk/ukpga/2005/5/contents - Corporation Tax Act 2009, s 1219.
- Finance (No 2) Act 2023, s 344, amending Finance Act 2010, sch 6.
https://www.legislation.gov.uk/ukpga/2023/30/contents - Cowan v Scargill [1985] Ch 270; Butler-Sloss v Charity Commission [2022] EWHC 974 (Ch); Charities Act 2011, s 292A.
https://www.bailii.org/ew/cases/EWHC/Ch/2022/974.html
https://www.legislation.gov.uk/ukpga/2011/25/contents - Inheritance Tax Act 1984, ss 116, 124C and 124D, as amended by Finance Act 2025 and Finance Act 2026.
https://www.legislation.gov.uk/ukpga/1984/51/contents - Inheritance Tax Act 1984, s 115(5), as substituted by Finance (No 2) Act 2024, s 11.
- Inheritance Tax Act 1984, s 6A, inserted by Finance Act 2025, s 44.
- Inheritance Tax Act 1984, ss 23, 30, 31 and 125 to 130 and sch 1A; Taxation of Chargeable Gains Act 1992, ss 250, 257 and 258; Income Tax (Trading and Other Income) Act 2005, ss 11 and 768.
https://www.legislation.gov.uk/ukpga/1992/12/contents - Mexico, Ley del Impuesto Especial sobre Producción y Servicios, art 2, fracción I, inciso H, and the SHCP rules on payment with carbon credits; Colombia, Ley 1819 de 2016, art 221, and Decreto 926 de 2017; South Africa, Carbon Tax Act 15 of 2019, s 13, and the Carbon Offsets Regulations 2019.
https://www.diputados.gob.mx/LeyesBiblio/pdf/LIEPS.pdf
http://www.secretariasenado.gov.co/senado/basedoc/ley_1819_2016.html
https://www.parliament.gov.za/storage/app/media/Acts/2019/Act_15_of_2019_Carbon_Tax_Act.pdf - FCA Handbook, ESG 4.3.1R; FCA, PS23/16 (November 2023).
https://www.handbook.fca.org.uk/handbook/ESG - Regulation (EU) 2019/2088 (Sustainable Finance Disclosure Regulation), arts 8 and 9.
https://eur-lex.europa.eu/eli/reg/2019/2088/oj - Property (Digital Assets etc) Act 2025, s 1; Law Commission, Digital Assets, Final Report (Law Com No 412, 2023).
https://lawcom.gov.uk/project/digital-assets/ - IAASB, ISAE 3000 (Revised) and ISSA 5000 (2024).
https://www.iaasb.org/standards-pronouncements
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