The dust may have settled in the immediate aftermath of the Chancellor’s Spring Budget speech in the House of Commons, but industry continues to look at the impact not the rhetoric.

One expert has expressed concern that a tax move could make tenancies in Scotland “significantly shorter and fewer in number.”

The Government is looking to explore taxation of ecosystem service markets and potentially expand agricultural inheritance tax relief to cover some environmental land management.

Secretary and adviser to the Central Association of Agricultural Valuers (CAAV), Jeremy Moody said it is: “welcome news for landowners and farmers, who may have concerns about entering certain environmental schemes in case they forfeit agricultural property relief (APR)”.

Stage one of the process calls for evidence on the tax treatment of ecosystem service units which Mr Moody welcomes as timely, given some uncertainties. Stage two is a consultation about a possible extension of APR from inheritance tax to cover land in environmental land management, exploring how far the loss of APR may be a barrier to taking up environmental management options.

The call for evidence then also seeks views on the Rock Review’s proposal to limit APR on let land to where it is let for at least eight years and Mr Moody warns: “It will not encourage anyone who is not letting to start letting. Why should they let it if they have to let it for eight years when they can get the relief by not letting?”

He said: “It is intended to help tenants looking at doing environmental things and tenants investing in their business – and you can see the argument. The counter argument is at the moment you get APR for however long it’s let for and if you start limiting it, this will not encourage anybody who might be thinking of letting, from letting. More likely, it will turn short lets into shorter lets and see some avoid letting.”

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Turning to the impact of the move in Scotland, Mr Moody said: “While there may be a few people letting on SLDTs, who would then be on a MLDT, the concern is that it would encourage many more people who are currently letting to go to very short SLDTs or find other ways of an agreement that aren’t tenancies.

“That’s a larger slab of land and lettings than the small number that might move towards a slightly longer term. The concern is that it would be a deterrent to letting on an SLDT.

“It looks very broadly, a proposal which is very adverse to SLDTs which are now the predominant form of new Scottish lettings, but adds nothing positive to MLDTs.

“If we want a tenanted sector, the outcomes are probably perverse and we’ll see it tend to shrink.”