Land remediation and tax relief – things to know

Many businesses do not realise that it is possible to reclaim tax relief against the cost of cleaning up contaminated land to make it fit for use again. Here is what you should know about the scheme and its eligibility.

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Contaminated land tax relief was introduced by the government 15 years ago to help mitigate the cost of land remediation services. It enables businesses to claim up to 150 per cent tax relief against the cost of cleaning a contaminated site, which is offset against their bill for corporation tax.

The bill was originally set up as a way to encourage the cleaning and use of commercial land, preserving greenbelt land as a result. Although the scheme has now been around for a number of years, very little is known about it. It applies to buildings and not just land.

Eligibility criteria

For the scheme to apply, the building or land in question must be owned directly by the claimant limited company when the remediation work is carried out. This must be on a leasehold or freehold basis with a term of at least seven years.

There must also be evidence that serious harm could be caused to the environment, to people, to buildings or to watercourses in the form of pollution if land remediation is not carried out by contractors such as http://www.ashremediation.co.uk/.

Types of qualifying contamination

The type of land contamination must also qualify. This includes asbestos, sulphate in concrete or soil, industrial activity pollution, landfill gases, radon, arsenic, Japanese knotweed, and the removal of disused utility services.

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To attain the tax relief, the qualifying spend must go directly on land remediation activities. The costs that qualify include activities such as surveys; ground excavations; groundwater treatment for scoping purposes; employee wages and NIC contributions when at least 20 per cent of their time is spent on remediation activity; sub-contractor payments; and materials.

Businesses can also make retrospective claims where costs were incurred within the last two years of the tax year in which the spending took place. Companies that make a loss can also apply for the scheme and obtain a paid tax credit, which is swapped for loss surrender.

It is important to note that although the amount of tax relief is generous, the claims process must be carefully followed to meet HMRC’s requirements.

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