Tax relief for restoring contaminated or derelict land

Businesses can claim relief from corporation tax for land remediation, which means restoring contaminated or long-term derelict land. The rate of relief is 150 per cent of the qualifying clean-up cost.

Clean-up expenditure qualifies if all of the following are true:

• the land is in the UK and was acquired by the business to carry out its trade or property letting business
• the land was already derelict or contaminated at the time it was acquired
• the dereliction or contamination was not caused by action or inaction of the business or a person connected to the business.

Relief extends to buildings on the land. Land is contaminated if contamination is present that is causing or has the real potential to cause significant harm. The cost of dealing with natural contaminants (other than Japanese Knotweed, arsenic or radon) does not qualify for relief.

The relief is only available to businesses subject to corporation tax.

HMRC: Land remediation relief

The money you spend on remediation, i.e. cleaning up land, qualifies if:

• it is spent on land which is contaminated
• it is spent on qualifying land remediation
• it is spent on paying your employees or subcontractors, or on buying materials
• it would not have been spent if the land wasn't contaminated
• the cost was not met directly or indirectly by anyone else.

Losses created or increased because of expenditure on land remediation can be surrendered for a payable tax credit of up to 16 per cent of the qualifying land remediation loss.

HMRC: Land remediation tax credits

Land remediation relief is only available to businesses, not to individuals or partnerships. Businesses responsible for polluting the land or adding to existing contamination are not eligible for the relief.

In this Guideline

Climate change levy

Climate change agreements

Enhanced capital allowances

Landfill tax

Vehicle tax and fuel duty

Aggregates levy

Tax relief for restoring contaminated or derelict land