Land Remediation Relief (LRR)

What is the Land Remediation Relief Scheme?

Land Remediation Relief is a relief on corporation tax of the capital expenditure incurred for cleaning up contaminated or derelict land. The relief aims to encourage the re-development of land blighted by contamination from previous industrial use.

Contaminated land is defined as land with something in, on or under the land, which causes ‘relevant harm’ or there is a serious possibility that ‘relevant harm’ will be caused. The tax relief is available for many decontamination solutions on both the land and buildings as HMRC understand that there are multiple different methods of preventing, minimising or mitigating the effects of relevant harm. Therefore, any costs incurred to change the condition of the land is an allowable expenditure, as well as costs incurred to establish the level of contamination. This includes the removal of contaminated soil and water, the treatment of harmful organisms, the removal of natural contaminants, and the removal and treatment of invasive plants.

Derelict land is defined as land out of productive use, since 1 April 1998, and is only able to be bought back into productive use if buildings or structures on it are removed. Unlike expenditure on contaminated land, qualifying expenditure on derelict land is very specific. Qualifying expenditures include the removal of; post-tensioned concrete heavyweight construction, building foundations and machinery bases, reinforced concrete pilecaps, reinforced concrete basements or below-ground redundant services.

What are the benefits of Land Remediation Relief?

A claim for Land Remediation Relief reduces a company’s taxable profits by 150% of its qualifying expenditure and a business can expect a cash benefit of 16% of the surrendered losses. The resulting cash benefits of a successful land remediation claim, based on different levels of qualifying costs, are shown below.

Land Remediation Relief qualifying expenditure

The following costs may qualify for relief:

• Employee costs – Costs for those directly and actively engaged in the relevant land remediation
• Materials costs – Items used directly in the remediation work
• Subcontractor costs – Payments to subcontractors
• Professional fess – Payments made for advice on how to remove the contamination

What are the deadlines for a Land Remediation Relief claim?

A company must make a claim for Land Remediation Relief in its tax return for the relevant accounting period. However, the claim can also be made in an amended return for the relevant accounting period, the time limit for the claim is the first anniversary of the filing date for the relevant company tax return.

In addition, a company must elect to treat the qualifying capital expenditure as a deduction in computing taxable profits. This must be done within two years of the end of the accounting period in which the expenditure is incurred.

How we can help

Although the Land Remediation Relief can be an essential source of much needed cash, we find that many businesses need to be made aware of what costs are eligible or overlook the scheme completely. It is not straightforward to ensure the required conditions are met or distinguish between qualifying and non-qualifying expenditure. As a result, we see mistakes in land remediation relief claims where the claim may be missing expenditure that could be rightfully claimed or claims where costs are included that aren’t qualifying. 

If you’re unsure where your expenses would qualify for Land Remediation Relief, our specialist advisors can help you evaluate the eligibility to help you build a robust claim. We'll work closely with you to gather all the necessary information and documentation to support your claim. Our team will then prepare a detailed report that outlines the nature and extent of the contamination. The report would also outline the work undertaken to decontaminate, as well as the costs associated with remediation. We have a thorough understanding of the Land Remediation Relief regulations and can guide you through the process from start to finish.

Get in touch

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