12 Jun 2020

Have you acquired either contaminated or derelict land for the purposes of your trade or UK property business?

Have you incurred expenditure on remediating this contaminated or derelict land?

If so, an election for corporation tax relief may be applied for, which is available in the form of an additional 150% revenue deduction in computing the profits of the company’s trade or UK property business, if you are an owner occupier/landlord or, a 50% additional deduction if you are a property developer. The relief is also available to non-resident landlord companies, which fall into the corporation tax regime from 1 April 2020.

If the company is loss making, upon making a claim, the enhanced deduction may be surrendered for a 16% repayable tax credit, which equates to, 24% of actual expenditure.

Retrospective elections and claims for relief may be applied for, as long as they are submitted within two years of the end of the accounting period in which the expenditure was incurred.

Contaminated land – Land or buildings are considered to be in a contaminated state if, there is contamination present as a result of industrial or construction activities, which is causing, or could cause, harm to humans, animals or to buildings. Common examples of qualifying contamination are as follows:

• Asbestos
• Japanese Knotweed
• Sulphate contamination in soil/concrete
• Hydrocarbon contamination

Derelict land – Land is in a derelict state if it cannot be put to productive use without the removal of buildings or other structures. The land must have been derelict throughout the period beginning with the date the land was acquired, or 1 April 1998 if earlier. Common examples of derelict land remedial works include the following:

• Removal of post-tensioned concrete
• Removal of redundant below ground services and concrete foundations

The relief is generous, and any claims should be properly made as they are likely to be scrutinised by HMRC.