Land Remediation Relief (LRR) is available to incentivise the remediation of contaminated or derelict land.

First introduced in 2001 and subsequently updated and expanded in 2009, LRR can offer significant benefits to corporation taxpayers that acquire contaminated or derelict land in the UK. Companies or corporate partners, with sufficient profits can claim an enhanced corporation tax deduction of 150% of qualifying costs. Loss-making companies or corporate partners can surrender qualifying land remediation losses for a 16% tax credit.

LRR can benefit both property developers and companies carrying on a trade. It is typically available (but not limited to) the cost of removing asbestos, radon, arsenic, Japanese knotweed, hydrocarbons and ground gasses. Additional costs, such as professional fees from the assessment of the contamination, can also be included as qualifying expenditure to enhance the claim. It is also available in respect of derelict land (i.e. land that has been out of use for an economic activity since at least 1 April 1998 and which cannot be regenerated without removing buildings or other structures on the land).

The timing of the benefit and the ability to make retrospective claims depends on whether the company incurred capital or revenue expenditure. For capital expenditure, the relief is claimed in the year the expenditure is incurred, whereas revenue expenditure is claimed in the year the expenditure becomes a deduction for tax purposes.

Whilst LRR is very generous, the rules are detailed and claiming the relief can be complex.  LRR is also becoming a target area for some of the unscrupulous and unregulated agents who had previously targeted Research and Development (R&D) Tax Relief claims, as HMRC’s scrutiny of R&D claims has increased.

Get in touch

If you would like to understand if you can benefit from LRR, please do get in touch with one of our specialists in our Construction and Property Incentives team who would be happy to help.