BNG for Landowners

Our comprehensive guides takes you through some of the key considerations for developing a BNG scheme.

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What is BNG?

Biodiversity Net Gain (BNG) is a new requirement ensuring that all new developments contribute positively to biodiversity. Introduced under the Environment Act 2021, BNG mandates a minimum 10% increase in biodiversity post-development. This improvement is measured against a pre-development baseline and aims to leave the natural environment in a demonstrably better state than before.

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Why Should Landowners Explore BNG?

BNG is part of a new ‘Natural Capital’ movement that assigns value to previously intangible natural assets. Restoring biodiversity can create tradeable assets in the form of BNG units. Landowners who create BNG schemes are therefore creating tradeable assets that are now being traded through ‘nature markets’. BNG can provide a new revenue stream for landowners while also financing environmental stewardship.

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How Can Landowners Get Involved with Biodiversity Net Gain (BNG)?

If you are a landowner interested in developing a BNG scheme there is a lot to consider. From eligibility, legal responsibilities and project management to commercial considerations, and stakeholder management. Greenshank exists to take landowners through this process and ensure the best outcomes for you, and for nature.

Resources for Landowners

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Commercial Considerations

Better understand the BNG market and how decisions you make at the start of the project can impact later on.

Landowner eligibility

Understand if you are eligible and your legal commitments if you undertake a BNG scheme.

Nutrient Neutrality

If you are considering combining nutrients and BNG, we explain the complexities of a Nutrient Neutrality scheme.

Looking to Create a BNG Scheme?

If you are considering a BNG or nutrient scheme, get in touch to understand how to ensure maximum benefit from your scheme.

Key principles of BNG

Measurable improvement: BNG requires a quantifiable increase in biodiversity. This is measured using the BNG Metric. The Metric uses a baseline assessment of habitat condition and quantifies the improvement in habitat condition and distinctiveness to show a positive impact on biodiversity.

Create additional improvements
One of the key principles of BNG is termed 'additionality'.

This means BNG schemes should provide biodiversity improvements thar are additional to existing obligations and other grant funding, such the new Sustainable Farming Incentive.

This principle ensures that the biodiversity enhancements made are above and beyond what is already required by law, policy and financial incentives, thereby contributing to a net positive impact on the environment.

Achieve the best outcomes and a ‘Net Gain’
The Environment Act stipulates that developers must achieve at least a 10% net gain in biodiversity. This statutory requirement ensures that biodiversity improvements don't simply replace habitat that is lost to development.

Adherence to the Mitigation Hierarchy

Deliver of biodiversity loss mitigation should be delivered following a hierarchy that must prioritise:

Avoidance: Preventing adverse impacts on biodiversity.

Minimisation: Reducing the severity and extent of unavoidable impacts.

Restoration/Rehabilitation: Repairing and restoring ecosystems damaged by development.

Offsetting: Compensating for residual impacts through biodiversity enhancements elsewhere.

Avoid losing biodiversity that cannot be offset by gains elsewhere
This ensures that irreplaceable habitats and species are preserved, recognizing that some losses cannot be adequately compensated by enhancements in other locations.

Address risks
Scheme developers are required to manage and mitigate risks to biodiversity. This ensures that potential negative impacts on biodiversity are identified, assessed, and minimised throughout the development process.

Create a Legacy
BNG projects must be sustainable over the long term. This includes committing to a minimum 30-year period for the management and maintenance of enhanced or created habitats. Long-term plans should include monitoring, adaptive management, and contingency measures to address unforeseen challenges.

Stakeholder Engagement
Effective BNG requires the involvement of various stakeholders, including developers, landowners, local communities, and environmental organisations. Engagement ensures that biodiversity objectives align with local ecological, social, and economic contexts and that projects gain broader support and legitimacy.

Integration with Local and National Strategies
BNG initiatives should be integrated with local biodiversity action plans and national conservation strategies. This alignment ensures that BNG projects contribute to broader ecological networks and landscape-scale conservation goals, enhancing habitat connectivity and resilience.

Optimise Sustainability
BNG schemes should promote sustainable practices. This ensures that biodiversity enhancements are not only beneficial in the short term but also support long-term ecological health and resilience.

Monitoring and Management
Regular monitoring and reporting on the progress and effectiveness of BNG measures deployed to ensure compliance with agreed-upon biodiversity targets. Schemes must be managed to achieve these targets.

Stakeholder Engagement
BNG Schemes must be shown to be financially viable for the 30 year period and that all of the long-term monitoring and management requirements can be secured.

BNG FAQ

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What us a National Character Area (NCA)?

A National Character Area (NCA) is a distinct natural subdivision of England, defined by a combination of landscape, biodiversity, geodiversity, and cultural and economic activity. These areas reflect the unique character of different parts of the country, each with its own specific ecological and geographical features. NCAs provide a framework for setting conservation priorities, guiding land management, and planning biodiversity strategies. They help in understanding the different environmental and socio-economic conditions that shape the landscape and influence sustainable development and biodiversity initiatives across England.

Who needs to buy BNG units?

Developers undertaking projects that result in biodiversity loss and cannot achieve the required biodiversity net gain onsite must purchase BNG units. This requirement applies when onsite options have been exhausted, and the project still needs to meet the mandatory 10% net gain in biodiversity as stipulated by planning policies and regulations.

Are there any specific types of developments that must buy BNG units?

No, all development, including residential, commercial, and infrastructure projects, may be required to buy BNG units if they cannot achieve Net Gain onsite.

How are BNG units purchased?

BNG units can be bought from accredited habitat banks or through government schemes that offer biodiversity credits. These units represent measurable improvements in biodiversity, ensuring developers compensate for their environmental impact.

Are there any penalties for not buying BNG units when required?

Yes, failing to secure the necessary BNG units can result in planning permission being denied or legal enforcement actions, ensuring compliance with biodiversity regulations.

How is BNG taxed?

This is not tax advice, except to say… please get some!

The tax position regarding the trading of BNG units is complex. Various legal structures are being developed for the creation and sale of these units, whether directly from landowners or via intermediaries. Detailed analysis of these structures is essential to understand the tax implications. Often, simple amendments to agreements can improve a landowner’s tax position, necessitating careful review.

Confusion exists around the accounting of BNG. Transactions usually involve upfront cash receipts, requiring careful cashflow management due to the 30-year commitments. The sale of BNG units is expected to be VAT-applicable, but this is not yet confirmed, so professional advice is crucial.

The Autumn Statement indicated a further update on the taxation of environmental land management and ecosystem service markets is expected in Spring 2024. Key questions include the availability of Agricultural Property Relief (APR) for land in BNG schemes. Until further guidance is provided, clarity is awaited. Considering a 30-year agreement, land gifting and Inheritance Tax (IHT) implications require careful consideration.

Landowners or farmers considering this new income stream should seek early tax and legal advice to fully understand risks and optimise tax positions. While a BNG scheme may be suitable for some, it may not be the right choice for others.