LAND REMEDIATION RELIEF

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 the process of rehabilitating land acquired from another entity, which is either contaminated or in a state of dereliction.

AVAILABLE RELIEF

This particular relief allows for a 100% deduction against corporation tax, alongside an extra 50% 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 like arsenic and radon. 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 as 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.

EXCEPTIONS

The relief is not applicable if the pollution was caused by the company applying for it.
Additional exclusions include:

  • The decontamination expenditure being subsidised, for instance, through a grant, and A discounted land acquisition cost due to pre-existing contamination.

DO YOU HAVE A QUESTION?

Do you have a question about Land Remediation Relief, or would you like to know more about how STax can help you make a claim? Get in touch via email or telephone. Alternatively, to find out more complete our contact form.

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