Say you’re a property developer working on your latest project, the last thing you want to discover is Japanese knotweed infesting your site.
Or perhaps you own rental properties or an office building, you don’t want to hear asbestos is lurking in your roof.
When we hear about contamination of our property, our first thought is usually money related and how much it’s going to set us back.
However, you may not be aware of a small saving grace called ‘Land Remediation Relief’ which could help you claw back some of your expenses.
What is Land Remediation Relief?
Land Remediation Relief is a corporation tax relief, so it’s only available to limited companies.
It works by giving an extra tax deduction of up to 150% of qualifying expenditure on cleaning up contaminated land or buildings.
The relief is available to companies if there is contamination present as a result of an industrial activity that is/could cause harm.
This could include arsenic, radon, Japanese knotweed and also asbestos, which is what we’re going to focus on in this article.
Let’s look at an example…
Emma owns residential properties within her limited company, which she rents out to tenants.
Whilst renovating between tenants, her contractor discovers asbestos in the garage and areas of the roof and estimates that costs to rectify will be in the region of £3,500.
Expenditure of this type would usually be disallowed as capital expenditure, and Emma would receive no tax relief on this cost.
Claiming Land Remediation Relief
By making a claim for Land Remediation Relief, Emma is not only allowed a deduction for this cost against her profit, but a 50% uplift is given too!
100% of cost allowable £3,500
50% uplift on cost £1,750
Total deduction £5,250
Under the new corporation tax rules, Emma’s company is a marginal rate payer (taxable profit between £50,000 and £250,000) meaning any tax savings are effectively at 26.5%.
So, by making a claim for Land Remediation Relief, Emma has secured a tax saving of £5,250 x 26.5% = £1,391.
This claws back 40% of the cost of fixing her asbestos problem!
Will my property be affected by Asbestos?
Asbestos may be a particularly relevant topic for those who own buildings, commercial or residential, that were built before the year 2000.
It was in this year that the use of all forms of asbestos was banned within the UK. Therefore, any property build before this date may be contaminated and you should take care to employ a relevant professional when removing any contaminated material.
What do I do if I have an Asbestos Problem?
Asbestos Limited have a specialist team with extensive experience in helping both private and commercial clients with their asbestos problems.
If you have any concerns about your property and are looking for more information about an asbestos survey or management plan, you can find lots of useful information on the Asbestos Limited website or you can contact the team on 01634 232221.
Hopefully this article serves as a silver lining for anyone burdened with the costs of rectifying contaminated property, and sheds a light on an overlooked but very valuable form of tax relief.
If you have any queries about Land Remediation Relief, or are interested in making a claim on your corporation tax return, then please contact Christie or give us a call on 01634 731390 to speak to one of the team.
If you would like to find out more about some of our services that might help you, please take a look at our related pages:
Property Investors & Developers
Blogs Related to Tax Relief
Take a look at our other blogs on the topic of Tax Relief:
How You Can Reclaim VAT When Building Your Own Home – The DIY Housebuilders Scheme
Want to reduce your Corporation Tax Bill? A no brainer!