Contaminated Land Remediation Relief

Contaminated land remediation relief can deliver: -

• An allowable tax deduction of up to 150% for both capital or revenue expenditure (ie. a potential tax saving of up to £28.50 for every £100 incurred)
• If loss making, a land remediation tax credit up to 16% of the amount of the deduction (i.e. a potential cash saving of £24 for every £100 of qualifying expenditure incurred), or 16% of the unrelieved loss if lower. Losses available to be carried forward are reduced accordingly.

The claim for the tax credit must be made in the company's tax return or an amended return. The tax credit will be paid to the company by HM Revenue & Customs (subject to set off against any outstanding tax liabilities). It does not count as income for tax purposes.

The relief is available for companies’ subject to UK corporation tax, and is not available to individuals or partnerships, although a company which is a member of a partnership may claim with respect to its share of the expenditure. Real Estate Investment Trusts (REITS) may also claim LRR. There are special rules for Life Assurance companies. Non-resident landlords are subject to income tax and as such will not normally be eligible for relief.

CLRR is available to developers as well as corporate occupiers and investors which means it can have a real impact on the decision to develop a site or not. Aside not being responsible or connected with anyone involved in the contamination, from 1 April 2009, a claimant must hold a 'major interest' in the land (e.g. a lease of at least 7 years or more).