Contaminated and Derelict Land Tax Relief: What you need to know

Contaminated Land Tax Relief

Contaminated Land Tax Relief (CLTR), often referred to as ‘Land Remediation Relief’, can provide enhanced tax relief across all commercial property sectors. Unlike traditional Capital Allowances, CLTR is also available to property developers and housebuilders who are constructing or refurbishing residential dwellings. The relief is restricted to entities within the charge to corporation tax and not available to individual investors or partnerships being taxed under the personal tax self-assessment provisions. Real Estate Investment Trusts (REIT’s) can also qualify for CLTR in certain circumstances.

CLTR can improve your company’s cash flow by reducing its tax liability and, in some cases, by obtaining a tax repayment from HMRC. Qualifying CLTR costs can receive a 150% tax deduction within a company’s tax computation, or in loss-making scenarios be surrendered for a cash tax credit back to HMRC at a present rate of 16%.

Derelict Land Relief

Derelict Land Relief was originally introduced by Finance Act 2009 to encourage uninhabited sites in the UK to be brought back into productive use. To qualify, a site must be listed on the National Land Use Database (NLUD) as being derelict since 1998, or have been derelict for a qualifying time period of 10 years. Broadly, derelict land is defined as:

  • Land damaged by previous industrial or other development that it is incapable of beneficial use without treatment. Treatment includes any of the following: demolition, clearing of fixed structures or foundations and levelling.
  • Abandoned and unoccupied buildings in an advanced state of disrepair i.e. with unsound roof(s).

In line with the land remediation provisions, an enhanced deduction is available for qualifying expenditure bringing derelict land back into use. Or subsequently, for loss-making companies, it can be surrendered for a cash tax credit at 16%.

You can read more about Contaminated and Derelict Land Tax Relief in our latest MHA Construction and Real Estate Publication

Should you wish to discuss either relief or if you think you may need assistance making a claim, please contact a member of our Construction and Real Estate team on 01293 227670.