Tax relief available for contaminated land

Land Remediation Relief (LRR) is a form of Corporation Tax relief that provides a 100% deduction plus a 50% additional deduction for qualifying expenditure incurred in the restoration of contaminated land situated in the UK.

• Land in a ‘contaminated state’. ‘Contaminated state’ means, in short, that ‘relevant harm’ is being caused, or there is a serious possibility of ‘relevant harm’, or it could cause significant pollution in groundwater, streams, rivers or coastal waters.
• Land in a ‘derelict state’. ‘Derelict state’ means not in productive use and cannot be put into such use without the removal of structures or buildings.
• Land contaminated by hazardous substances, pollutants, structural threats.
• Typical costs incurred would be asbestos removal, dealing with harmful organisms, demolitions.

• The land was contaminated by the claimant, or became contaminated or derelict during the company’s ownership
• The contaminants are naturally occurring (but specific relief is allowed for naturally occurring arsenic, radon, and Japanese knotweed)
• The expenditure has already been subsidised
• The expenditure could obtain relief under the ‘normal’ capital allowances regime
• The cost of the land was discounted, and terms in the agreement for acquiring it was stated to include necessary remediation works
• The land is a nuclear site
• For landlords, if the contamination is as a result of tenant activity.

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