Land Remediation Relief
Introduced in 2001 (and updated in 2009), Land Remediation Relief (also known as Contaminated Land Tax Relief) enables Commercial property owners, investors and developers to reduce their corporation tax liability by up to 150% of the cost of cleaning up contaminated brownfield sites or restoring derelict and damaged buildings to use.
Qualifying costs include the remediation of contaminated land, removal of asbestos from buildings, breaking-out buried structures and the treatment of harmful organisms and naturally occurring contaminants such as Japanese Knotweed, radon and arsenic (etc).
LRR can be used as a valuable tool to improve the viability of a development scheme and significantly increase cashflow and profitability.
Who can claim Land Remediation Relief?
Commercial property owners, investors and developers can claim LRR on qualifying expenditure associated with the decontamination of land and buildings. Relief is available on developments, regeneration projects, fit-outs and refurbishments. The time limit for retrospective claims is up to 3 years from date of incurring qualifying expenditure.
To be eligible for LRR, the land or building must be owned by a limited company which then undertakes qualifying remediation. The land or building must be owned either as a freehold or leasehold with at least a 7-year term at inception.
How much can I claim?
The relief is claimed via a company’s tax return. The rate of relief depends on the status of the company claiming the relief:
Investors (for example, landlords) and owner-occupiers must claim within two years from the period of expenditure, with an LRR rate of 150% of qualifying costs.
Developers can also claim in the year of expenditure but have a four-year time limit and the LRR rate is 50% of qualifying costs.
For loss-making companies, a tax credit (cash in hand) can be claimed
As per our sample illustration below, LRR reduces the amount of tax payable on your profits, releasing cashflow for further investment back into your business.
Qualifying Remediation
Broadly speaking, to qualify for LRR the land or buildings must pose a possibility of ‘serious harm’ to persons and the environment, ‘damage’ to buildings, or pollution to water courses.
Common examples of qualifying contamination and measures to remove or mitigate the risks include:
Asbestos e.g. roofing panels – complete removal or capping / encapsulating qualifies
Sulphate contamination in soil and concrete
Hydrocarbon contamination e.g. fuels, oils etc. or dealing with disused tanks
Any pollution from previous industrial activity e.g. heavy metal contaminants from industrial processes
Ground / landfill gases – any protection measures e.g. membranes / ventilation systems required in buildings or foundations
Japanese Knotweed
Radon protection measures
Arsenic
Removal of redundant utility services and concrete foundations on sites or part of sites derelict since April 1998
Post-tensioned concrete, building and machinery foundations, below ground redundant services, and reinforced concrete basements.
What can I claim?
If you have incurred qualifying land remediation costs listed above, can claims associated costs, which include, but are not limited to:
Excavations, surveys, soil/groundwater treatment to scope out remediation process.
Preparatory activities, including consultancy fees, risk assessments, lab costs and regulatory liaison costs.
Capital expenditure, including the cost of plant and machinery.
Employment and labour costs (incl. employers NIC) where more than 20% of employee time has been spent on remediation.
Sub-contractor costs & materials
How can I make a claim?
Although the tax relief available is generous, claims should be properly presented to ensure they meet HMRC requirements. HMRC review all claims carefully, therefore, it’s essential to seek advice from experienced tax advisers, who are familiar with the criteria and process.
Our land remediation relief team of qualified specialists with diverse experience and multidisciplinary construction, engineering, surveying, accounting and tax advisory skills, leverage their expertise to maximise cash saving benefits for our clients. Throughout the remediation expenditure review process, we will work closely with you to identify all qualifying expenditure. We take care of all the heavy lifting, so that you can focus on your core business activities.
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