Land remediation relief
Following the review of reliefs undertaken by the Office of Tax Simplification,
the Government has announced that it intends to abolish the land remediation
relief (LRR) provisions originally introduced in 2001.
These provisions currently give a 150% super-deduction from corporation tax for qualifying expenditure (both capital and revenue) incurred by companies in cleaning up land in a contaminated state.
The rationale for abolishing this relief is stated to be that it has not provided sufficient incentives to alter behaviour and is often claimed in relation to works that would have been carried out in any event.
Who will be affected?
Primarily house builders and major developers, as well as other companies incurring significant expenditure on the remediation of contaminated land.
A date after 2012, to be confirmed following consultation in 2011.
It is disappointing that the Government intends to remove a relief that is regarded as not influencing behaviour, rather than changing the qualification criteria such that the measure achieves its objectives. Whilst it is undoubtedly true that many construction projects have been undertaken without reference to the availability of tax relief under the LRR provisions, it is also possible that some projects which would involve the decontamination and containment of harmful substances will no longer be viable.