Tax Credits for the Remediation of Contaminated Land or Derelict Buildings

If you have acquired a brownfield site or a used building, then any expenditure incurred whilst removing any contamination from the land or building may qualify for Remediation of Contaminated Land (RCL) tax credits.

RCL tax credits are a company tax relief that can either reduce a company's tax bill or, for in some cases, provide a cash sum. As such, they can represent an alternative and perhaps vital, source of funding.

The system works by enhancing the tax deduction available on qualifying expenditure by 50%. Where the enhancement creates or increases a loss the company may be able to 'surrender' the loss and receive a cash repayment. Alternatively, these losses can be used to mitigate taxable profits using the normal loss relief rules.

Qualifying Contamination

The land or buildings situated must be situated within the UK and must have been in a contaminated state when the company bought them. Any acts of omission or actions by the company that have led to the contamination will not qualify. The contamination must pose a threat to humans, wildlife (Eco systems) or property.

The relief will be available to all companies that acquire used land (brownfield sites) or buildings for use within their trade or UK property business.

The expenditure can also include remediation works to land adjacent to or joined to the contaminated land and any controlled waters that will be affected by the contaminated land.

Qualifying Cost

These include:

• Employment costs (salary, employer's NIC and pension contributions) for employees engaged for more than 20% of their time on land remediation.
• Materials - All materials employed directly in relevant land remediation. There is not a published definition of materials but these would usually include plant, machinery, tools and equipment that are owned, leased or hired.
• Sub-contractor costs.

For further advice on RCL tax credits or to arrange a free assessment of whether you may qualify, please contact Peter Hogan in Darlington, Nicola Bellerby in Durham or Terry Doyle in York.

Internet Links:

Remediation of Contaminated (or Derelict) Land Tax Credits

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