Land remediation means restoring contaminated or long-term derelict land and is an effective way for businesses to reduce their tax liability. Any business can claim relief from corporation tax for land remediation. The rate of relief, which businesses may claim in respect of land remediation, is 150 per cent of the qualifying cleanup cost.
Cleanup expenditure qualifies for tax relief through land remediation if all of the following are true:
- The land is located in the UK, and was acquired by the business to carry out its trade or property letting business
- The land was already derelict or contaminated at the time it was acquired by the business
- The dereliction or contamination was not caused by the action or inaction of the business or a person connected to the business
Relief extends to buildings on the land. Land is contaminated if contamination is present that is causing or has the real potential to cause significant harm. The cost of dealing with natural contaminants (other than Japanese Knotweed, arsenic or radon) does not qualify for relief.
The relief is only available to businesses subject to corporation tax.
Find details about entitlement to land remediation relief on the HMRC Website
The money you spend on remediation, i.e. cleaning up land, qualifies if:
- It is spent on land which is contaminated
- It is spent on qualifying land remediation
- It is spent on paying your employees or subcontractors, or on buying materials
- It would not have been spent if the land hadn’t been contaminated
- The cost was not met directly or indirectly by anyone else
Losses created or increased because of expenditure on land remediation can be surrendered for a payable tax credit of up to 16 per cent of the qualifying land remediation loss.
You can read about land remediation tax credits on the HMRC Website
Land remediation relief is only available to businesses, not to individuals or partnerships. Businesses responsible for polluting the land or adding to existing contamination are not eligible for the relief.