Unlocking Opportunities: Land Remediation Relief for Property Developments on Contaminated Land
In the ever-evolving landscape of property development across the UK, one of the obscure and unique tax reliefs still remains a huge benefit to thousands of building projects undertaken on contaminated land. Land Remediation Relief (LRR) offers a promising opportunity for companies to reduce their Corporation Tax bill or even receive funding through tax credits.
The rising trend of building projects on previously developed, derelict, and contaminated land presents vast possibilities for developers to leverage the benefits of LRR.
The Advantages of Land Remediation Relief
LRR operates by reducing taxable profits, effectively lowering a company's Corporation Tax liability for the year. This opens the door to various potential benefits for different businesses involved in the property sector.
Qualifying Relief Levels
In certain cases, owner-occupiers or property investors can enjoy up to 150% Corporation Tax relief from qualifying remediation expenditure. Even loss-making businesses can receive a 24% tax credit, while developers can avail a Corporation Tax relief of 50%.
LRR encompasses qualifying costs related to contaminated land, defined as expenses incurred in "preventing, minimising, remedying, or mitigating any harm or pollution of land or controlled waters, by reason of which the land is in a contaminated state, or restoring the land or controlled waters to their former state."
Such qualifying expenditure includes activities like removing asbestos from buildings, breaking-out buried structures, and treating harmful organisms and naturally occurring contaminants such as radon and arsenic.
Defining Contaminated or Derelict Land
To be eligible for LRR, land must be considered contaminated or derelict, meaning there is something in, on, or under the land that causes 'relevant harm,' or there is a serious possibility of 'relevant harm' occurring in the future.
Scope and Exclusions
It is important to note that Land Remediation Relief applies solely to businesses and not to individuals or partnerships. However, companies that are members of a partnership can make an election concerning the partnership's land remediation expenditure, provided certain criteria are met.
Exclusions from the relief may apply if a company has already claimed capital allowances on the same expenditure or if it is the original polluter or connected to the original polluter.
Key Criteria and Claims Process
The company should have also incurred revenue or capital expenditure on qualifying land remediation work in relation to the land.
Claims for LRR are made through a company's usual Corporation Tax relief return, but specific conditions can impact when and how a company should claim the relief.
Expert Advice for Optimal Utilisation
Despite being a generous relief, LRR remains relatively underutilised. Given the complexity of the scheme and the steps required to determine eligibility, it is highly recommended that developers and investors seek professional advice beforehand. This where speaking to a tax relief specialist like RDI Solutions comes into play.
Land Remediation Relief presents a lucrative opportunity for property developers and investors engaged in building projects on contaminated land. By unlocking the potential of this tax relief scheme, businesses can mitigate tax liabilities, access tax credits, and optimise their projects' financial outcomes. Embracing professional advice is crucial in navigating the intricacies of LRR and ensuring a seamless and successful claim process.
To learn more about if Land Remediation Relief and to understand if your property development business qualifies for the scheme, simply get in touch on 0330 133 1856, or make an enquiry with one of our helpful and knowledgeable LRR professionals will get in touch to establish your eligibility.