Land Remediation ReliefTax specialists in Sheffield, Doncaster and Northampton
Land Remediation Relief
One area that is often overlooked in a company’s tax computations is the ability to claim Land Remediation Relief (‘LRR’). This relief applies where a company acquires contaminated or derelict land or buildings for the purposes of a trade or property business and spends money on removing contamination.
The land must have been acquired in a contaminated state and the claimant must not have been the original polluter.
The relief is equal to 150 percent of the qualifying expenditure incurred on cleaning up the contaminated land. Qualifying costs can include the professional fees related to assessing the contamination and the actual costs of removing it.
ABC Limited acquires a building and needs to replace the roof. A professional survey finds that the existing roof contains asbestos. The company therefore has to engage a specialist company to remove the asbestos. The professional survey fees amount to £2,000 and the fees for the asbestos removal amount to £40,000. LRR applies and this means that the company can claim an enhanced deduction in its tax computation of £63,000 (being £42,000 @ 150 percent). This gives additional tax relief of £21,000 and saves corporation tax of £4,200 (being £21,000 @ 20 percent).
Alternatively, where the claim creates a loss then the company can claim a ‘land remediation tax credit’ to the extent the loss is not relieved against other profits. This is equal to 16 percent of the amount of the deduction or 16 percent of the unrelieved loss if lower.
Claims must be made within two years of the end of the accounting period in which the expenditure was incurred. Therefore, if a claim for LRR has been missed it may be possible to amend the company’s corporation tax return to make such a claim subject to the time limit.
Land Remediation Relief is only available to UK companies.
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