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Remediating Contamination and Dereliction
Awareness of the benefits that this relief can provide, have not been highlighted since it barely escaped being abolished in 2012. Both incentives, provide a 150% tax deduction for the qualifying costs associated with remedying contamination or dereliction.
As Landfill Tax limits have been raised over the last few years from £10.60 per tonne to £72 per tonne in 2013 to £84.60 per tonne in 2016 it is surprising, that Land Remediation Relief is not taken more readily. As the alternative means of dealing with contamination (i.e. sending contaminants to landfill) has now become more expensive.
Land Remediation Relief and Derelict Land Relief can provide a valuable cash flow advantage, thus providing a mechanism for making a development viable.
However, before undertaking a purchase of contaminated land and buildings, it is essential that a client:
- has ensured that they have the correct corporate structure that would entitle them to claim this tax relief
- make sure that they or their advisors do not undertake actions that may prevent tax relief from being claimed
- does not plan the works in a way that would prevent this tax relief from being claimed. This is especially important as an incorrect course of action may lead to additional Landfill tax
- is aware of how the wording of grant applications may prevent their full entitlement to land remediation relief from being claimed.
Land or buildings containing any contamination, is without a doubt not an attractive selling point of any property. Indeed, many would be investors might be tempted to walk away unless the Vendor offers a suitable discount. However, if the vendor discounts the land or building as a result of the contamination, the opportunity to obtain tax 150% tax relief will be lost.
Cavetta Consulting, can assist you through the minefield of claiming Land Remediation Relief. For more information on how we can help you, download the attached brochure.