Land Remediation Relief

What is land remediation relief?

LRR is a generous tax relief offered by the government to property developers and investors with a view to utilising and improving land that has been contaminated or left derelict. The original Act was first published in April 2009. The relief provides a reduction of taxable income by 150% of the qualifying cost of remediation for property owners and investors, 50% for developers or up to 16% cash repayment of the surrendered losses where there is no CT due i.e. a loss-making business.

As an example, if a property is retained as an investment, the value of the relief will equate to 150% of the qualifying LRR realised through a company's corporation tax return. For example, at the current maximum rate of 25% UK corporation tax rate, £100,000 of qualifying LRR would be worth £37,500 (i.e. £100,000 x 150% x 25%) for the owner.

What is deemed contaminated land?

Land is contaminated for LRR purposes if there is something which could cause harm to living organisms, pollute controlled waters, impact on ecosystems or cause structural damage to buildings.

These are examples of contaminants; asbestos, lead/copper/zinc/heavy metals, sulphurous materials/hydrocarbons, Japanese knotweed, radon and arsenic.

There is also the matter of derelict land. Land is defined as being derelict for the purposes of Land Remediation Relief if it is:
1. Not in a productive state; and
2. Cannot be put into a productive state without the removal of buildings or other structures

The term “productive state” has a wide meaning. It includes land that is in economic use, for example as retail premises or a car park, and land that has a social use, as housing or a recreational area. In addition, the presence of buildings or structures on the site must be preventing the site being brought back into productive use.

Who is eligible for LRR?

The LRR claim is made via the annual tax return of the business. The regulations pertaining to qualifying for LRR are:
1. The business is a registered UK taxpayer
2. The property is within the UK
3. The property is owned or long-term leased by the claimant
4. The property is commercial or has communal areas in a residential building
5. The claimant is not responsible for the contamination of the property

How does GrowthPad help with a LRR claim?

Once engaged on a LRR claim, GrowthPad will ensure a full land survey is done by a suitably qualified surveyor and subsequent financial report is provided for the client to use in their annual tax return. The process is:
1. An initial scoping call – this is where we qualify the potential LRR claim
2. Letter of Engagement – the contract between the property owner / developer and ourselves, setting out the scope of work and fee structure.
3. Entitlement check – ensuring that the property is owned by the claimant
4. Financial – we obtain the relevant financials from the business or their appointed accountant
5. Survey & analyse – our inhouse surveyors and tax analysts work together in assessing the value of the potential claim in definitive detail.
6. Analyst’s report – our experts provide a full report with relevant tax computation ready for the client to use with their tax return and submit it to the client or accountant.
7. Completion – we invoice for the work done based on the terms of the LOE.

What does it cost to do a LRR claim?

Our fee for Land Remediation Relief is a flat 20% of the value of the benefit received. This is inclusive of all surveying and analyst costs.