UK Land Remediation Relief - Spared the Axe


Following consultation, the UK Government has decided not to abolish land remediation relief (LRR) after all. This comes after a strong reaction from developers, who argued that it would render many brownfield redevelopment schemes unfeasible.

The purpose of LRR is to provide a financial incentive to developers to bring land back into use that: 1) has been contaminated by previous industrial use; or 2) contains derelict structures; or 3) is blighted by invasive species (Japanese Knotweed).

A company can deduct an amount equal to 150% of the qualifying clean-up cost when calculating its taxable profits. A company with losses arising from qualifying land remediation can also benefit by the surrender of such loss in return for a cash payment of 16% of the loss. However a company cannot seek LRR if the land is in a contaminated state or derelict, wholly or partly, as a result of anything done or not done by the company, and it is only for dealing with legacy issues created by previous owners of the land.

The Government says that each year 1,300 companies claim the relief, which costs the Exchequer around £40m.

The Government initially stated that LRR had failed to deliver its policy objective and also wanted to save money in these financially constrained times. However respondents argued that removing this relief would affect the regeneration of uneconomic brownfield sites and the ultimate benefits of such regeneration would be lost. Several companies claimed that they take land remediation relief into account when appraising sites, and that removal of this relief would make a significant number of their planned projects financially unviable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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