Developers are being encouraged to develop brownfield sites by the extension of Corporation Tax relief available to them for redevelopment of these sites or of derelict or contaminated land.
The relief works by granting tax relief (Land Remediation Relief – LRR) on 150 per cent of the expenditure on labour, materials and sub-contracting, where this has been incurred solely due to the condition of the land. Developers which incur losses for tax purposes as a result can also surrender these for cash. To qualify for LRR, the land must have been acquired by the claimant company for the purpose of a UK property business or trade.
LRR cannot be claimed if:
the claimant company, or a party connected with it, was responsible in any way for causing the contamination or dereliction; or
where arrangements have been put in place with the purpose of creating or enhancing a claim.
There are, as one would expect, a number of detailed provisions which apply.