Land Remediation Tax Relief

Are you a UK company that’s acquired a plot of land or building that’s in a contaminated or derelict state? If so, you could be eligible for HM Revenue and Customs’ (HMRC’s) remediation of contaminated land tax relief, also known as Land Remediation Relief, whereby you can claim for the costs of remediating contaminated land or bringing long-term derelict land back into productive use.

What Is Remediation of Contaminated Land Tax Relief?

Land remediation relief is a corporation tax relief claimable by the landowner or leaseholder of contaminated land or property.

This tax relief was introduced to encourage landowners to clean up and restore land on brownfield sites in the UK that has been acquired from a third party in a contaminated or derelict state. The relief applies to the landowner (both freehold or with a leasehold of seven or more years) who can claim for the costs of remediating contaminated land or bringing long- term derelict land back into productive use.

What Is Contaminated Land?

Land or buildings are in a contaminated state if there is contamination present as a result of industrial activity (except in the case of radon, arsenic, or Japanese knotweed) such that:

  • It is causing relevant harm.
  • There is a serious possibility that it could cause relevant harm.
  • It is causing, or there is a serious possibility that it could cause, significant pollution in the groundwater, streams, rivers, or coastal waters.

Examples of contaminants in land and buildings are radon, arsenic, asbestos, Japanese knotweed, oil, petrol, chemicals, and gases.

This tax relief is therefore beneficial for property developers who are having to carry out remediation of contaminated land and buildings. Derelict land can also qualify for land remediation relief if the land has been derelict since the time of acquisition or April 1998 (whichever is earlier) and costs are incurred removing old foundations, redundant utilities, concrete bases, and the like.

What Expenditure Is Eligible for Land Remediation Relief?

Preparatory Costs
Capital Expenditure
Employment and Labour Costs
Sub-Contractor Costs

How Does Land Remediation Relief Work?

The relief works in a similar way to the research and development (R&D) tax relief small and medium enterprises (SME) scheme, with an uplift of expenditure or a repayable tax credit for loss-making companies. It applies to all UK companies regardless of what the land is used for.

In a nutshell, it allows for an enhanced corporation tax relief of 150% of the qualifying costs of the original 100% plus an extra 50% whether or not the costs are treated as revenue or as capital. Loss-making companies can surrender the loss for a 16% tax credit.

How Can Ryan Help with a Land Remediation Relief Claim?

A claim for land remediation relief must be made in a company tax return. This can be carried out two years from the end of the relevant accounting period where the costs were incurred. 

To claim land remediation relief, claimants must deduct the amount of any subsidy or grant received from any claim. Ryan’s team of tax relief specialists, accountants, and industry experts can help landowners and developers to navigate the relief, identifying eligibility and creating the technical report for submission to HMRC. 

Connect with an Expert

To discuss your eligibility for land remediation relief, simply fill out the form below, and one of our experts will be in touch.