Tax relief for the remediation of contaminated land was introduced in the 2001 budget. Where the rules are satisfied, expenditureincurred after 10th May 2001 on remediation now receives preferentialtreatment for tax purposes.
An extra 50% is added to the expenditure for the purposes of the tax deduction. A company spending £100,000 on cleaning up land is treated for tax purposes as if it had spent £150,000. Put another way, if it is subject to corporation tax at the full rate of 30%,it effectively gets relief for remediation work at a rate of 45%.
Where the expenditure would normally be on capital account, for example in the case of a property investor, or a trader using the land for its own premises, then relief for the clean up cost is available as it is incurred. (Normally such expenditure would only be allowable when the property is sold, perhaps many years hence). In addition, the 50% “bonus” applies here also.
Qualifying expenditure for the meaning of this tax relief includes all consultancy work undertaken by Wilbourn Associates as well as contractors employed to remediate the land in question.
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Key Brownfield tax rules
- Only available to companies;
- Must acquire the land in a contaminated state;
- Applies to additional expenditure due to contamination.