The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Companies that acquire contaminated or derelict land for the purposes of their trade or UK property business can claim an enhanced deduction of 150% for their clean-up costs. The relief is not available to individuals or partnerships. However, a company that is a member of a partnership can claim relief for its share of the partnership’s qualifying land remediation expenditure.
By election, relief can be claimed by a company for capital expenditure incurred on remediation of land acquired for use inits trade or for its UK property business to be given as a 150% revenue deduction incomputing the profits of that trade or business, although not for expenditure that qualifies for capital allowances.
Where the enhanced deduction results ina loss then the loss can be used inthe normal way or it can be surrendered inreturn for a cash payment.
Further details of land remediation relief can be found inCIRD60000.
The qualifying conditions for the relief are that the company has acquired a major interest inthe land inthe UK for the purposes of a UK property business or a trade carried on by the company. The land must have been ina contaminated state at acquisition, although this is not a requirement if the land is contaminated by Japanese knotweed. Alternatively, the land was ina derelict state throughout the period beginning on the earliest of 1 April 1998 and the date on which the interest inthe land was first acquired by the company or a person who was connected with the company.
To qualify for a deduction for capital expenditure (see below), the company must incur capital expenditure which is ‘qualifying land remediation expenditure’ (see below) and make an election for the relief.
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