What is Land Remediation Relief?
Land Remediation Relief, often called Contaminated Land Tax Relief, offers a great opportunity for businesses to reduce their corporation tax. If your company has incurred costs in cleaning up land that was contaminated when purchased from a third party, you may qualify for a 100% corporation tax deduction, plus an additional 50% on qualifying expenses.
Land or property may be considered contaminated due to past industrial activity if:
- It’s already causing harm to people, animals, or buildings.
- It has the potential to cause harm in the future.
- It could lead to significant pollution in surrounding water sources like streams, rivers, or coastal areas.
This relief encourages the use of brownfield sites by making them safer for humans, animals, and buildings alike. To benefit, you must file your claim within two years of the accounting period when the clean-up costs were incurred.
How Does the Tax Benefit Work?
At TaxTek, we understand the complexities of Land Remediation Relief, and we’re here to help maximize your tax savings. Here’s a simplified example:
Example 1:
If your company has a taxable profit of £200,000, the tax liability at 19% would be £38,000. But, let’s say you’ve spent £30,000 on remediation costs to clean up contaminated land. You could reduce your taxable profit by an additional £15,000 (50% of £30,000), bringing your tax liability down to £35,150—saving a total of £8,550.
Example 2:
If the remediation costs are capitalized on the Balance Sheet, your company can still claim a deduction. In this case, a £30,000 cost would reduce your taxable profit by £45,000, saving you £8,550 in tax.
Both examples result in the same tax savings, but the method of claiming differs depending on how you record your expenses.
Do I Qualify for Land Remediation Relief?
If your company has incurred costs related to cleaning up contaminated land or property, you may qualify for this relief. Here are some examples of eligible costs:
- Removal of old concrete foundations or structures from derelict land.
- Treating or removing asbestos.
- Handling Japanese Knotweed.
- Reducing or removing lead contamination.
- Removal of petrol and diesel tanks.
- Treatment of radon or arsenic.
Both capital and revenue expenditures can qualify, and companies can claim the additional 50% relief on top of their clean-up costs. Even if your company is making a loss, there may be a way to claim a tax credit in return for the portion of the loss related to Land Remediation Relief.
How Can TaxTek Help You?
Navigating the rules around Land Remediation Relief can be tricky, but that’s where TaxTek comes in. Our team of tax specialists, including land engineers and accountants, will guide you through the process and ensure you get the maximum relief possible. We’ll assess your eligibility using our advanced tools and provide you with a clear, detailed report on your potential savings.
Whether your company is turning a profit or operating at a loss, you could still benefit from Land Remediation Relief. Get in touch with us today to see how much you could save!
Why Choose TaxTek?
At TaxTek, we’re experts in tax relief for businesses across the UK. With offices in Glasgow, London, and Manchester, our in-house team includes surveyors, tax technicians, accountants, and more—ready to help you unlock your potential tax savings.