Land Remediation Relief

Land Remediation Relief is relief on corporation tax available to companies that buy and develop contaminated or derelict land. The relief, introduced in 2001, was expected to be discontinued in 2012. However, the Government has announced that the relief will now continue to be available.

The Relief

A company subject to UK corporation tax may claim relief on profits equal to 150% (50% for property companies) of "qualifying expenditure" on cleaning up land that it purchased in a "contaminated or derelict state". Qualifying expenditure is capital or revenue spent on establishing the extent of, and carrying out the clean up of, contamination or dereliction: relief on capital expenditure must be claimed in the same year as expenditure. Relief on revenue may be claimed in the year it becomes a deduction for tax purposes.

If remediation is carried out by the company itself, the relief is only available on the cost of materials and employees specifically engaged in the remediation itself.

There is no relief if the remediation work is not carried out or if, on acquiring the land, a buyer was aware of land contamination and has since had the power to remedy it but failed to do so. Relief is also unavailable in certain situations where remediation is required by law.

Land in a Contaminated or Derelict State

Land is classified as being in a contaminated state if, as a result of industrial activity, it may cause death or harm to living organisms, either directly or by way of water pollution or through the ecosystem, and where it damages buildings having a real impact on the use of the building. Examples of this include...