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Cash for your clean up
With Greenfield sites seemingly the unachievable acquisition for developers, here’s an often overlooked bonus for those of you with contaminated land.
Land remediation tax allows companies to claim a corporation tax deduction of 150% (no that’s not a typo) on qualifying expenditure incurred in decontaminating land. There are however a few points to be aware of:
- The land must have been acquired for the purpose of the companies trade or property letting business and at the time of the acquisition it must have been contaminated;
- Contaminated means if substances are causing harm, or there is the possibility of them causing harm;
- If your expenditure is capital in nature, you not only get the higher tax relief, but you get it much sooner. This is because the relief is available in the year of expenditure rather than being added to the CGT base cost of the property;
- Care should be taken when considering accepting grants or contributions to the works, as these can affect the availability of the relief;
- If you are considering undertaking the works yourself, you should be aware that you cannot claim for any cost of employees who have spent less than 20% of their time on the project in any accounting period.
We need not point out that if the seller could be regarded as the polluter, then the seller should sell to the buyer before the remediation is carried out or the tax deduction may not be available.