What is contaminated land?
For the purposes of this tax relief it is where the land contains substances such as asbestos, Japanese Knotweed or sulphate resistant concrete which are causing harm or could possible cause harm, pollute or possibly pollute controlled waters.
Is there a definition of contaminated land costs?
There is a general definition which is that you have incurred the costs, ‘preventing, minimising, remedying or mitigating any harm or pollution of land or controlled waters, by reason of which the land is in a contaminated state, or restoring the land or controlled waters to their former state’.
Who can claim this tax relief?
The relief is not available to individuals or partners, but a company that is a member of a partnership can claim relief in respect of its own share of the partnership’s qualifying land remediation expenditure.
What is the benefit of making a claim for Land Remediation Relief?
It entitles a company to claim an additional 50% for qualifying remediation expenditure as a trading expense, in the same year as the remediation expenditure.
How do I claim and is there a time limit?
For expenditure made on capital account you need to elect within 2 years of the accounts year end in which the expenditure was made. For property developers the remediation expenditure is on trading account and it is possible to look back and claim up to 4 years after the accounts year end of the qualifying expenditure. So it is possible to make retrospective claims.
Are there any conditions to claim this tax relief?
The land must be in the UK
The land must be acquired by the company for the purposes of its trade or schedule A business and on acquisition of the land, all or part of the land was in a contaminated state, and the company incurs qualifying land remediation expenditure.
What expenditure qualifies for Land Remediation Relief?
- Expenditure on land which is in a contaminated state
- Expenditure on land remediation directly or on its behalf
- Expenditure on employee costs or materials or is qualifying expenditure on subcontracted land remediation
- Expenditure that would not have been incurred if the land had not been in a contaminated state
- Non-subsidised expenditure (for example by the original polluter)
Are there any exclusions?
- If you have already claimed capital allowances on the same expenditure
- If you are the original polluter
What information do you need to identify if a claim is possible?
We start with the Site Investigation and soil report, details of works undertaken and the remediation contractor’s priced tender and final account will be scrutinised to extract qualifying items for land remediation relief
Does my accountant need to get involved?
As a specialist we will liaise with your accountant to provide them with a fully disclosed report suitable for submission to HMRC. Your accountant will need only include the report with your tax return on submission to HMRC.
What if my company is making a loss?
It is possible to surrender that trading loss and receive a land remediation tax credit instead equal to 16% of the total loss.
Are there any restrictions on receiving land remediation tax credits?
There are restrictions which are; the loss that can be exchanged for the tax credit must be no more than 50% of the qualifying land remediation expenditure for any particular accounting period.
The site has been acquired from a connected company, can I still claim?
If the connected company was the original polluter then it is not possible.
What if my company is the polluter?
It is only possible to claim land remediation relief if you are not the original polluter
Can I get tax relief for removing foundations and concrete and underground services diversions?
It is possible if the land qualifies as derelict land and has been in a derelict state since acquisition and at least since 1 April 1998 and incapable of productive use unless remediated.
What if I already claimed capital allowances on this derelict land?
Relief is not available for capital expenditure for which a claim for capital allowances has already been made, or could be made.Back to News