What is Land Remediation Relief (LRR)?
Land contamination poses significant risks to both health and the environment, often requiring extensive remediation efforts. The associated costs can be substantial for property owners and developers. To support the cleanup and redevelopment of contaminated land and buildings, the UK government offers LRR, a tax incentive providing enhanced relief to UK companies that incur expenses in remediating contaminated land, buildings, or dealing with derelict structures.
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To claim land remediation relief, businesses must identify eligible expenses, such as removing contaminants, treating harmful substances, and demolishing derelict buildings. Maintaining detailed records, including invoices, contracts, and work descriptions, is crucial. UK companies can claim up to 150% of qualifying costs, thereby reducing their taxable profits.
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Companies should include the claim in their tax return, submitting all necessary documents to HM Revenue and Customs (HMRC). Consulting a tax professional is advisable to ensure all qualifying expenses are correctly claimed, maximising the benefits of land remediation relief.
Qualifying for Land Remediation Relief
Introduced in 2001, Land Remediation Relief remains one of the most generous tax reliefs available to property developers and investors. However, like any tax relief, certain criteria must be met for a company to claim LRR.
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In order to qualify, the land and claimants must:
Reside within the UK.
Be subject to UK corporation tax.
Purchased the freehold or leasehold with seven or more years remaining.
Not be the polluter or connected to the polluter.
Deduct the amount of any subsidy or grant received from any claim.
LLR still remains one of the most
generous and beneficial tax reliefs available to property developers and investors
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Land Remediation Relief Eligibility
In order to satisfy a claim you must meet a number of conditions. Beneficiaries would typically be investors, property developers, house builders and owner occupiers. There are four questions you can ask yourself if you are considering claiming:
01
Are you subject to UK corporation tax?
Land remediation relief is available to UK companies subject to corporation tax. If your business is not subject to UK corporation tax, you may not be eligible for this relief.
02
Is the land in the UK?
Land remediation relief applies specifically to land located within the United Kingdom. If the land in question is not within UK territory, it does not qualify for this tax relief.
03
Do you have an interest in the land in question?
To claim LRR, you must have a legal interest in the land. This means ownership, leasehold, or another legal right to use or control the land where remediation activities are taking place.
04
Can you confirm you are not the polluter or have any connection to the polluter?
To qualify for land remediation relief, the claimant must not have caused or contributed to the contamination of the land, nor be associated with the responsible party.