What is Land Remediation Relief?
Land Remediation Relief is a specific form of tax relief designed to offset Corporation Tax. It applies to costs borne by companies in rehabilitating land acquired from another entity, which is either contaminated or in a state of dereliction.
This relief allows for a 150% (owner occupier/investor rate) deduction against Corporation Tax for eligible costs. Businesses can access Land Remediation Relief in two ways:
Reducing their taxable income by 150% of the expenditure that qualifies, or
Converting losses into a 16% tax credit.
In monetary terms, this equates to a cash return of 24% on qualifying expenses.
Definition of Contamination
Land and buildings are categorised as ‘contaminated’ when industrial actions have led to the presence of harmful substances, resulting in ‘relevant harm’. A wide array of decontamination activities, both for land and structures, are covered under this relief. This encompasses the elimination of tainted soil and water, the eradication of harmful organisms, and the removal of natural contaminants. It also includes the extraction of embedded structures and the treatment of invasive flora like Japanese Knotweed.
Criteria
Naturally, certain conditions must be met to qualify for this relief:
- The land must be causing or have a significant risk of causing harm as per Government definitions. This also extends to any negative impact on groundwater, rivers, and coastal waters;
- The contaminated land must be within the UK;
- The business must have acquired the land for commercial or trade purposes, and
- Remediation costs would not exist if the land was not tainted.
The relief clearly defines what constitutes eligible expenses, which include:
- Preliminary tasks, such as consultancy, risk assessments, lab testing, and regulatory interactions;
- Capital expenses, for example, plant and machinery;
- Labour and employment charges, and
- Costs related to sub-contracting work.
