The chances are you’ve never heard of land remediation relief. Land remediation relief is a valuable tax incentive introduced by the UK government to encourage businesses to clean up contaminated land.
The scheme often goes unnoticed by businesses who are looking to benefit their business. What’s more, it also positively impacts the environment whilst offering a range of other benefits additionally.
We provide an understanding of land remediation relief, its benefits for businesses and the environment, and how Nordens can support in the whole process…
What Is Land Remediation Relief?
Land remediation relief is a tax relief provided to businesses that undertake the remediation and restoration of contaminated land. Contaminated land refers to sites that have been polluted or contaminated by previous industrial activities. These include chemical spills, waste disposal, or historical land uses. These sites can pose significant risks to human health and the environment. Land remediation relief aims to incentivize businesses to address these risks by providing tax benefits for qualifying remediation activities.
Land remediation relief is governed by HMRC and is a relief from corporation tax only. It provides a deduction of 100%, plus an additional deduction of 50%, for qualifying expenditure incurred by companies in cleaning up land acquired from a third party in a contaminated state.
Land or buildings are in a contaminated state if there is contamination present as a result of industrial activity such that:
- it is causing relevant harm; or
- there is a serious possibility that it could cause relevant harm, or
- it is causing, or there is a serious possibility that it could cause, significant pollution in the groundwater, streams, rivers or coastal waters
Am I Eligible For Land Remediation Relief?
To be eligible for land remediation relief, businesses must meet certain criteria. This includes being subject to UK corporation tax and actively involved in the remediation of contaminated land. Additionally, the land in question must meet specific conditions related to contamination levels, relevant harm and past usage. ‘Relevant harm’ includes significant adverse impact on the health of humans or animals or damage to buildings that has a real impact on the way the building is used.
In addition to the deduction for the cost of the land remediation, the company can claim an additional deduction in computing its taxable profits. This additional deduction is 50% of the qualifying expenditure. A company can claim this additional deduction at any time within the general time limit for claims under Corporation Tax Self-Assessment. HMRC does not specify any particular form for the claim. A computation reflecting the claim and submitted in time is sufficient. The 50% additional relief is given in the same period as the actual expenditure is charged to the profit and loss account.
What Are The Benefits of Land Remediation Relief?
Financial Incentives
One of the key benefits of land remediation relief is the financial incentives it offers to businesses. The relief allows eligible businesses to deduct a portion of their qualifying expenditure from their taxable profits, thereby reducing their corporation tax liability.
The relief is calculated based on the actual costs incurred for land remediation activities, including site investigation, cleaning, and restoration. This can result in significant cost savings and improved cash flow for businesses.
Competitive Advantage
In addition to financial benefits, land remediation relief can provide businesses with a competitive advantage. By demonstrating their commitment to environmental stewardship and sustainability, businesses can enhance their reputation and brand image.
Stakeholders, including customers, investors, and regulatory bodies, increasingly value businesses that prioritise environmental responsibility. Land remediation relief can serve as a testament to a company’s commitment to sustainable practices. This naturally helps them differentiate themselves in the market.
Stimulating Economic Growth
Land remediation relief plays a crucial role in stimulating economic growth. By incentivising businesses to invest in the clean-up and restoration of contaminated land, the relief encourages job creation in the environmental sector.
Remediation projects require a range of expertise, including environmental consultants, engineers, construction workers, and scientists. These projects not only provide employment opportunities but also contribute to local economic development.
Positive Environmental Impact
Land remediation relief has a direct positive impact on the environment by facilitating the clean-up of contaminated land. Contaminated sites pose risks to human health and ecosystems. By incentivising businesses to remediate these sites, the scheme helps in reducing the potential exposure to harmful pollutants. This protects the environment, and improves public health and safety.
Remediating contaminated land often involves restoring ecosystems and habitats that have been damaged by pollution. Land remediation relief encourages businesses to undertake ecological restoration alongside the clean-up process. This can include activities such as replanting native vegetation, reintroducing wildlife and improving soil quality. Ecological restoration not only helps to rehabilitate the affected site but also contributes to biodiversity conservation and the overall health of ecosystems.
What We Have To Say
Land remediation relief serves as a powerful tool for both businesses and the environment. By providing financial incentives, it reduces the financial burden associated with cleaning up contaminated land. Furthermore, it allows businesses to gain a competitive advantage through environmental stewardship while stimulating economic growth. Embracing land remediation relief can lead to win-win outcomes, benefiting businesses, society, and the environment alike.
Adam Truluck, our Tax Manager who fronts up our Land Remediation Relief service, states, “We offer a tailored service when it comes to land remediation from identifying claims, to creating detailed reports for applications to HMRC. We’ll take care of all the necessary admin and communications, guiding you through the whole process and providing a well-versed, detailed application to HMRC that maximises your chances of success. Together we can benefit your business, whilst also having a notably positive effect on the environment around us.”
We hope this has outlined to you what Land Remediation Relief is, whether you’re eligible, and how Nordens can support. If you’d like to know any further information, or anything accounting related, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy to talk you through your query.
