Land Remediation
Relief

FAQs

• + Who qualifies for LRR?

  Must be a UK company subject to Corporation Tax.

  Companies that qualify:

  Owner-occupiers (own trading premises)
  Investors or developers
  Corporate partners of LLPs
  Life assurance companies
  REITs

  Entities that don’t qualify include:

  Pension funds
  Private individuals
  Local authorities and public bodies (unless corporate entity)
  Schools

• + What are the main confirtions of an LRR claim?

  – Land/buildings must be in the UK and it must have been acquired for the purpose of client’s own business or property rental (investment).

  – The client must be a freeholder or long leaseholder (ie 7 years+).

  – Expenditure cannot be subsidised (eg through grants, compensation, insurance etc).

  – The land/buildings must have been contaminated at the time of acquisition from previous industrial activity.

  – Neither the client nor any person connected with the client can be responsible for the contamination.

  – The client must incur qualifying expenditures, eg. asbestos removal.

  – The land must not be a nuclear site.

• + What expenditure qualifies for LRR?

  – Preparatory costs, risk assessments, etc.

  – Staffing/employee costs.

  – Materials.

  – Services contracted out.

  – Sub-contracted expenditures such as:
  Asbestos removal
  Remediation works.
  Survey fees.
  Professional fees, environmental consultant

• + What types of claims are there?

  1. Investors (eg landlords) and owner-occupiers:

  Claim in the year of expenditure.
  Time limit 2 years from the end of the period.
  LRR rate is 150% of qualifying costs.
  Net cost to the client is 71.5%

  2. Developers:

  Claim in the year of expenditure or sale of the property.
  Time limit 4 years from the end of the period.
  LRR rate is 50% of qualifying costs.
  Net cost to the client is 90.5%

• + How is LRR claimed?

  1. A claim is made through the client’s company tax return following the end of the accounting year.

  2. The report prepared to show details of the qualifying expenditure and LRR calculation, which is attached to the tax return for the agreement with HMRC.

  3. A profitable client can claim a reduction in tax.

  4. A loss-making client can instead claim a tax credit (repayment), for example, £100k of qualifying expenditure @ 150% LRR = £150k, tax credit claimed at 16% x £150k = £24,000.