Updated October 2009
Finance Act 2009 makes significant changes to an existing tax relief and extends it to enable developers wishing to redevelop brown field sites to claim extra tax relief to help with their costs. The relief is only available to companies and is extended to include derelict land as well as contaminated land.
The redesigned land remediation relief grants tax relief of one and a half times the expenditure incurred to encourage developers to concentrate on brown field sites. Developers who incur a tax loss as a result can also claim a refund of tax by surrendering losses for cash.
The expenditure on which additional relief is available is restricted to expenditure on staffing costs, materials and sub contract expenditure, which would not otherwise have been incurred but for the state of the land and the expenditure is not subsidised.
To qualify for relief the land must have been acquired by the claimant company for the purpose of a UK property business or trade.
Land Remediation Relief is not available:
• Where the company, or a party connected to the company, was responsible in any way for causing the contamination or dereliction.
• Where arrangements have been put in place which either create or enhance a claim
• For cleaning up nuclear sites.
Land remediation tax credit - how much do you get?
If a company incurs a loss as a result of land remediation tax relief, a land remediation tax credit of 16% of the amount of the loss may be claimed in the company tax return. The losses will not then be available to carry forward against future profits. The claim will depend on the merits of each case. If cash flow is critical the tax credit might be the best choice even though you are sacrificing future loss relief which might instead provide relief of at least 21%.