Definition
Land Remediation Relief is a corporation tax relief that gives qualifying companies an additional 50% deduction on top of the 100% revenue deduction for the cost of cleaning up contamination or derelict land that was acquired in that state. Qualifying expenditure includes the removal of contamination such as asbestos, hydrocarbons, heavy metals or Japanese knotweed, and the treatment of derelict conditions such as demolition of long-vacant structures. Both revenue and some capitalised expenditure can qualify, with an election available for capital spend.
How HMRC defines it
HMRC guidance is in the Corporate Intangibles Research and Development Manual at CIRD60000 onwards, notwithstanding the different subject matter. The legislation is in Part 14 of the Corporation Tax Act 2009. Loss-making companies can surrender the additional deduction for a 16% payable tax credit under section 1151 CTA 2009.
Practical example
A property developer acquires a brownfield site for £2,000,000 and spends £600,000 removing contaminated soil and asbestos. The standard 100% revenue or capital allowance deduction is taken, plus an additional 50% under Land Remediation Relief, giving an extra £300,000 deduction against taxable profit in the relevant period.