Derelict Land Relief
Derelict Land Remediation Relief is a valuable tax relief that certainly is 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 on land or with buildings.
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.
For our guide on land remediation relief and contaminated land click here.
Pre-Purchase Advice
Derelict Land 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:
- has ensured that they have the correct corporate structure that would entitle them to claim this tax relief
make sure that they or their 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.
Derelict Land Relief
To be derelict the land must be out of productive use and be incapable of being brought back into business use unless buildings or structures on it are removed.
There are no stipulations on the use to which the site was previously put. However, to qualify it must be listed as derelict or have been derelict for at least 10 years.
To count as long term derelict land, the land must have been derelict since the earlier of: When the site was acquired by the claimant company, or a connected party or 1 April 1998.
Items Qualifying For Derelict Land relief
Relief is given for expenditure incurred in removing the following structures left from previous occupation of the site:
- Post-tensioned concrete
- Building foundations and machinery structures
- Reinforced concrete pile caps
- Reinforced concrete basements
- Below ground redundant services e.g. gas, water, electricity and communications.
