Guide

Unearth hidden tax relief: your guide to claiming Land Remediation Relief

Gateley Capitus

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If you, or your clients, have developed, brownfield sites or have refurbished commercial property assets, then Land Remediation Relief can help improve cash flow and profitability. Land remediation relief can be claimed on past developments and can add value to future projects.

The current economic climate makes any property development or refurbishment financially challenging. Yet the remediation of brownfield sites and redevelopment of older properties can attract this valuable tax relief and improve the viability of schemes.For developers this is currently the only corporation tax incentive available, and because of recent tax law changes non-UK resident company landlords are now able to claim the relief for the first time. So, it should not be overlooked.

Introduced in 2001 and modified in 2009 Land Remediation Relief (LRR) is still one of the most generous tax reliefs available to property developers and investors. The relief provides a tax deduction of up to 150% of the money spent on qualifying expenditure on brownfield sites and buildings. The relief is claimed in a company’s corporation tax return. The actual cash value of the relief depends upon the accounting treatment of the expenditure.

Introduced in 2001, land remediation relief is still one of the most generous tax reliefs available to property developers and investors

When can Land Remediation Relief be claimed? 

The timing of the benefit and the ability to make retrospective claims depends on whether the company incurred capital (investment) or revenue (trading) expenditure.

For capital expenditure, the relief is claimed in the year the expenditure is incurred. Whereas relief for revenue expenditure is claimed when the land or property is sold. For developers the relief allows an additional 50% of qualifying remediation costs to be written-off for tax.

Claims for capital expenditure must be made within two years of the year end of the accounting year when the expenditure was incurred. Claims for revenue expenditure may be made for up to four years from the end of the accounting year when the property is sold.

Who can benefit from Land Remediation Relief? 

Corporation taxpayers who can benefit from LRR include house builders, property developers, investors and owner occupiers.

Are there conditions that need to be met to make a claim? 

Like any tax relief there are conditions set out in the legislation which must be satisfied for a company to claim Land remediation relief. The land must be in the UK and all claimants must:

  1. Be subject to corporation tax.
  2. Have acquired an interest in the land which is greater than a 7-year leasehold.
  3. Not be the polluter or have any connection to the polluter.
  4. Deduct from any claim the amount of any subsidy or grant received.

Should you be claiming Land Remediation Relief?

The overriding question that needs to be asked is whether in undertaking the development your company would have incurred the expenditure if the land or property had not been contaminated?

How can we help you claim? 

Ensuring the required conditions are met and establishing between qualifying and non-qualifying expenditure is not straightforward and specialist advice pays for itself many times over.

Gateley Capitus has a team of LRR specialists, with expertise in surveying and tax, and experience interpreting environmental and remediation reports and expenditure to maximise the cost of qualifying relief. We can undertake a retrospective review of expenditure incurred and potentially unlock significant tax savings that may have previously been overlooked.

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