How does Land Remediation Relief benefit UK businesses?

Land Remediation Relief (LRR) is a tax incentive scheme by the UK that offers a tax deduction of up to 1.5 times the money spent on cleaning and redeveloping any contaminated or derelict land in the UK.

What are the eligibility conditions for claiming Land Remediation Relief?

To take advantage of the Land Remediation Relief, a business must meet the following eligibility criteria:

• The Business must be subject to UK Corporation Tax
• Land must be in the UK and should be acquired by the company for its trade and business, specifically from a third party in a contaminated state.
• Must be considered contaminated because of industrial activity which could cause harm like death or significant injury or damage to living organisms, water pollution, adverse effects on the ecosystem, and structural or other significant damage to buildings or other property or interference that significantly compromises their use.
• The acquisition cost must be discounted due to contamination of the land.
• The company must conduct qualifying land remediation activities either directly or through a contractor.

What is Qualifying Land Remediation Expenditure and its role in the relief?

This is the expenditure that is related to land that is either contaminated or in a derelict state, which would not have been incurred if the land was not in that state. This includes both revenue and capital expenditure, such as staffing costs, materials, and subcontractors’ costs.

How can businesses claim and benefit from Land Remediation Relief?

A business can claim LRR in their corporation tax return by deducting the qualifying expenditure from their profits. They can also choose to receive a payable tax credit if they make a loss for the accounting period. The LRR claim must be made within the time limit specified by HMRC, which is within one year from the filing date of the relevant company’s tax return.

There is, however, a possibility of making a claim, amendment, or withdrawal beyond the specified time limit if an officer of HMRC authorises it.

Learn about Land Remediation Relief in detail by checking out our complete guide.