How it works

Remediation of contaminated or derelict land

Understanding this tax relief

The relief operates by allowing qualifying expenditures related to the remediation, of contaminated or certain derelict land, to be deducted from the company’s profits. This results in a reduction of the tax liability. In essence, businesses engaging in land remediation activities can claim a percentage of their eligible costs as a deduction. This directly impacts the amount of taxable income. The percentage of relief varies, and it is crucial to consult the specific tax regulations to determine the applicable rates. Additionally, companies can carry forward any unutilised relief to future accounting periods. This provides flexibility for businesses involved in long-term remediation projects. Done by aligning financial incentives with environmental goals. Land remediation tax relief not only facilitates the cleanup of contaminated sites but also promotes a sustainable approach to business operations.

A mechanical wheel with a question mark in it

Qualifying Criteria

Land Remediation in 2024

Who is eligible to claim?

Land remediation relief is a corporation tax relief and is not available to sole traders or partnerships. However, if a limited company is a member of a partnership, it can claim a relevant percentage. Conditions of claiming include that the land must not have been specified as purchased at a discount due to the contamination of the land. Plus, the claimant must have a major interest in the land. The relief can be considered as being in two categories:

Contaminated land with diggers- Land Remediation

Contamination of land

Contamination could be from a number of different activities

To qualify for tax relief in this instance, the first and foremost requirement is that the land must need remediation due to contamination. This contamination could arise from historical industrial activities or waste disposal. Or, any other human-related actions that have left the land in an environmentally compromised state.

Furthermore, the remediation activities must aim to bring the land back to a usable and safe state. This includes cleaning up pollution and removing hazardous substances. Plus, restoring the land to a condition where it can be put to productive use.

It should be noted that the relief is only available to the business responsible for cleaning up the land. Under no circumstances is the polluter allowed to make a claim.

Hazardous waste

Derelict land

Bringing land back to a useable condition

To qualify for land remediation tax relief where derelict land is being brought back into use, the first requirement is that the land needs to have been derelict since before 1 April 1968. The term ‘derelict land’ also includes buildings that are dilapidated and unoccupied.

Expenditure qualifying for the relief includes the cost of removing any structures to bring the land back into use. This would include the removal of the dilapidated buildings as well as other structures. These could include things such as concrete basements and pile caps and redundant pipework from utility services. There are no rules relating to what the land was previously used for.

Derelict land and building- Land Remediation

Please be aware that it may be possible in a loss making situation to surrender the loss for a tax credit immediately payable from HMRC at a reduced rate of corporation tax, currently 16%.

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