Opportunities to stop paying unnecessary tax

Our team is always happy to look at further opportunities to save our Clients from paying unnecessary tax.

The redevelopment or refurbishment of existing property stock brings with it a vast opportunity to maximise tax relief opportunities. Not only is there plant and machinery allowances but also revenue deductions at 100% allowable in the year incurred and Land Remediation Relief at 150% of any qualifying expenditure.

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Picture shows wall with sign for Asbestos Contaminated Land Relief Land Remediation Relief Photo source from Canva

Remediating Contamination

Despite the name, Land Remediation Relief is a valuable tax relief that can save you some cash where you are dealing with contaminated land BUT ALSO redeveloping and refurbishing buildings, and is certainly not taken up as much as it should be.

Awareness of the benefit that this relief can provide, has not been well promoted since it barely escaped being abolished in 2012. The incentive provides a 150% tax deduction for the qualifying costs associated with remediating contamination or dereliction.

As Landfill Tax limits have been raised over the last few years from £10.60 per tonne to £72 per tonne in 2013 to £84.60 per tonne in 2016 it is surprising, that Land Remediation Relief is not taken more readily. As the alternative means of dealing with contamination (i.e. sending contaminants to landfill) has now become more expensive.

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Due diligence

Pre-Purchase Advice

Land Remediation Relief can provide a valuable cash flow advantage, thus providing a mechanism for making a development viable.

However, before undertaking a purchase of contaminated land and buildings, it is essential that a client:

  • makes sure that you or your advisors do not undertake actions that may prevent tax relief from being claimed;
  • does not plan the works in a way that would prevent this tax relief from being claimed. This is especially important as an incorrect course of action may lead to additional Landfill tax;
  • is aware of how the wording of grant applications may prevent their full entitlement to land remediation relief from being claimed.

Land or buildings containing any contamination, is without a doubt not an attractive selling point of any property. Indeed, many would be investors might be tempted to walk away unless the Vendor offers a suitable discount. However, if the vendor discounts the land or building as a result of the contamination, the opportunity to obtain tax 150% tax relief will be lost.

Photos shows construction site fence with sign for Land remediation in progress land remediation relief, contaminated land

Items Qualifying For 150% Land remediation relief

Before constructing the property or indeed even before the land is purchased, it may be worthwhile considering whether a claim for Land Remediation Relief or Derelict Land Relief is possible. This provides relief at 150% on qualifying expenditure which could have significant cash-flow advantages for your company.

Typical items you may find on site when re-developing existing buildings are:

  • Removal of asbestos
  • Treatment of Japanese Knotweed
  • Gas (e.g.. methane, radon) membranes and ventilation system
  • Provision of capping layer to provide barrier between source and receptors

For more information download our guide.

Land Remediation
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