Contaminated Land Remediation Relief (CLRR) was introduced in 2001 to address market failures and to bring back into use land (including buildings) that had been blighted by previous use for industrial purposes.
In 2009, CLRR was extended to address market failure in bringing long term derelict land back into use. Again, an incentive is given where land, whose development has been blighted by various kinds of enduring dereliction, is brought back into productive use.
Because they may represent a significant obstacle to redevelopment. CLRR is also available for the removal of contamination arising from, naturally occurring arsenic and arsenical compounds, radon and Japanese knotweed. These exceptions have been specifically allowed by secondary legislation; other, even seemingly closely related, items do not attract relief 'by analogy'.
Contaminated land remediation relief can deliver: -
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).
By the government’s own admission the rules on tax relief for remediating contaminated and derelict land are not delivering on policy objectives.Find out more