Rural real estate and natural capital interview: Peter Harker, Saffery

Lizzie Egan speaks to Peter Harker, partner and head of Natural Capital at Saffery.

'You’ve built Saffery’s Natural Capital practice into a specialist offering within a firm long associated with landed estates. Who are your typical clients and what’s the common thread across landed estates, agribusiness, wealthy families and not-for-profits?'

I’ve been at Saffery for coming up to 22 years - starting as a graduate in Manchester, then moving to London when I qualified. My career has taken different turns, but landowning clients have always been the constant: from large traditional estates down to smaller farmers with specific tax needs, agricultural businesses and commercial property. Anywhere land and property - predominantly rural - is at play.

My natural capital work started seven or eight years ago, after an event on natural capital accounting opened my eyes to what was coming. Our landowning clients hold the keys to the kingdom - anyone wanting to deliver ecosystem services has to go through them. 

You’ve previously framed the core challenge for landowners as wanting to “go green” while needing to “stay in the black.” With the Basic Payment Scheme gone, is natural capital a genuine strategic opportunity for clients, or simply a replacement income stream — and does the distinction matter?

Both. Some clients are environmentally driven — I have clients who bought land specifically to do environmental good, and if it pays for itself, all the better. Others are purely commercial and see a good business opportunity. Either way, I’ve yet to meet a bad actor; even the commercially driven ones enjoy doing right by the environment too. For traditional large landowners, many see it as another form of diversification. With farming subsidies shrinking, it’s a useful way to diversify income. Often it’s a field they’ve farmed for a long time that’s given poor yields which is being utilized for these schemes— so it can be a genuine win-win.

Setting projections aside, how much genuine value is reaching landowners today — in signed agreements and real receipts — and what does the market look like right now?

In terms of cash flowing, it’s definitely BNG. The government-mandated planning requirement for BNG units has created a real marketplace and made it far more investible; as long as the rules stay as they are, that demand isn’t going anywhere.

On volume, I’ve seen a significant proportion of all BNG sales transacted through our client base, so there’s a lot going on — but I’m aware there’s a lot that isn’t happening too. It’ll take a while for that supply-and-demand position to settle. That said, stand back and there’s a large over-supply problem in BNG at the moment — a lot of people dived in, got units registered, and are now feeling slightly disillusioned that they aren’t selling as quickly as they’d hoped.

In Saffery’s Land and Rural Review, you noted that valuation frameworks like the RICS Red Book haven’t yet been updated to properly take account of natural capital valuations. If an asset can’t be reliably valued, are landowners committing land for 30 years or more without understanding what they’re giving up?

We’ve had several conversations with valuation firms, because understanding value and value shifts matters for tax planning. The honest answer: the jury’s still out on some of the details here as market norms are established.

Conceptually, though, I’ve drawn my own BNG valuation curve, overlaid with the availability of reliefs like Agricultural Property Relief ('APR') and Business Property Relief ('BPR'). You start at agricultural value. Pre-scheme, you’ve probably accrued some hope value, so the figure rises. Then — in the simplistic scenario where you sell all your units on day one, that hope value converts to cash, but the land is now burdened with a 30-year commitment, so the land value drops sharply.

Over the 30 years one might expect it to climb back towards something close to agricultural value, assuming you can — and are allowed to — return it to agricultural use.

Are carbon, BNG and nutrient neutrality genuinely durable schemes, or policy-driven fashions that will fade once political attention moves on? A decade or more out, which do you back — and how do you expect BNG to fare?

Schemes entered into now where units have been sold will absolutely still be around in 30 years — they have to be. Whether a new scheme replaces BNG is another matter; 30 years is a long time in politics, so I’d be surprised if it survives entirely unscathed. Nobody in the sector thinks the metric is perfect, so there’s scope to improve it. BNG is good, but the land areas involved are small, so it’s not game-changing alone; other measures are needed to really shift things in terms of nature recovery.

That said, there’s now a much wider understanding of nature as infrastructure and of biodiversity’s importance, so I’d hope and expect policy to keep valuing and protecting nature in some form.

Realistically, what proportion of your clients have moved from exploration into a binding agreement — and for those still hesitating, do they fully grasp that these commitments bind future generations, from 30 years for BNG to 75-plus for nutrient neutrality?

Landowners are very aware of the commitment of these schemes, if anything, that’s what holds people back. It’s such a big commitment that the fear of it has stopped quite a few from diving in. It’s not quite permanent land-use change, but it’s generational change at least. 

Where a client has suitable land, what drives the decision to deliver a scheme themselves rather than lease to a habitat bank operator — control, economics or tax treatment? And for a client without the time or expertise to manage decades of obligations, does outsourcing surrender too much value?

It comes down to structuring, appetite for risk, and the ability to self-manage. Larger landowners who’ve managed their land for centuries shouldn’t be fazed by delivering and managing a BNG scheme — they may need specialist ecology input for scheme design, but the ongoing management is well within their capability.

Alternatively, there’s a range of arrangements with businesses where you share more of the proceeds but de-risk delivery entirely. Leasing to an entity works well for smaller landowners or farmers who want to retire from farming but keep the land. Also working with a BNG business brings the advantages of access to a sales pipeline making it far easier to see the units sold.

In May 2026, HMRC published its first dedicated guidance on the taxation of ecosystem service payments, and you were involved in shaping it. Does it provide the clarity the sector had been waiting for, does it confirm most receipts are taxed as income rather than capital, and what’s the position on VAT?

The landscape is improving — there was a real lack of clarity a couple of years ago. A consultation in March 2024 looked at the tax treatment of ecosystem service payments, which we responded to along with many others. That led to an HMRC working party, which I sat on; it ran through most of 2025, final drafts came in January this year, and the guidance was published in May. It’s useful, if high-level — it answers the basic questions, and confirms that selling BNG units as a landowner is taxed as income, not capital, settling a lot of earlier debate.

Many people assumed capital because it looked and felt like a large capital receipt — as though you were disposing of your land for 30 years. But there’s no legal disposal when you sell units: in simple terms, you’re entering a 30-year commitment to deliver habitat services and getting paid up front.

The guidance also set out the VAT position confirming that sales of BNG units are subject to VAT at the standard rate where the seller is VAT registered. So there’s more clarity, though unanswered questions remain.

Revenue recognition remains one of the central accounting challenges — how and when to record receipts from BNG units, carbon credits and ecosystem services. Why is it so difficult to resolve, and are we meaningfully closer to an answer?

HMRC confirmed these receipts are largely taxed as income, but deliberately didn’t opine on how and when to recognise the profits — that’s a matter for the accountants, not the tax authority. This guidance is being worked on and I expect that when it is publishedguidance to be thematic rather than prescriptive, since the facts vary and judgement is involved — there are more than one way which you could account for selling BNG depending on the facts.

In some scenarios, the standards point towards recognising all the revenue up front, once you’ve delivered your promise in the transaction — alongside a provision for estimated delivery costs. The alternative is to treat it as delivering ecosystem services over 30 years and spread the revenue.

Both routes have pros and cons depending on the entity. For a typical private client, spreading income tax over 30 years helps cash flow. For a corporate vehicle, though, spreading it means you can’t distribute all the profit for 30 years, when you’d rather access dividends sooner — and if the provision is wrong, you risk a tax charge later or paying tax long after the cash has arrived. There’s no perfect route and the facts of the transaction will dictate the most appropriate treatment.

Do you have cautionary tales that would help landowners avoid any Natural Capital traps?

There’s a cautionary point on APR. A number of years ago it was identified that a landowner may lose the availability of APR by doing an environmental scheme.

We and other bodies such as the CLA applied pressure for this to be looked at and this eventually led to APR being extended to land under environmental schemes putting that land on a par with agricultural land. But it only applies to certain approved environmental schemes: I’d expect BNG to qualify, but non-statutory nature credits, or rewilding purely for your own enjoyment, won’t.

So the real trap is assuming that by carrying out an environmental scheme that it's fine when plenty of environmental schemes don’t qualify. 

This article is intended for professional advisers and high-net-worth individuals. It is intended for general information purposes only and reflects current market observations as at the date of publication. It does not constitute financial advice or recommendation.