Land remediation tax relief can be claimed on the cost of employing staff who are occupied in carrying out the remediation, the cost of material being used, and on payments given to subcontractors that are supporting with the remediation (including certain professional fees).
The relief is available for costs that are either capitalised or expensed in the P&L. A business can claim relief in either of two ways. It can set 150% of its qualifying expenditure against taxable profits; i.e. can reduce the amount of profit on which tax is payable by an additional 150% of spend for revenue costs, and an extra 150% of spend in case the cost was capitalised. Or if a business has a loss, it can take advantage of the credits by claiming a 24p per £1 cash refund on the qualifying expenditure. Let’s assume: a company spent £30,000 on qualifying land remediation. In addition to the standard tax relief, it can claim relief on an additional £15,000 (£30,000 x 50%). At a presumptuous tax rate of 20%, this results in a £3,000 tax saving.
The land remediation tax relief is only available to companies, and not to partnerships or individuals. However, a company, that is a member of a partnership, can claim relief with respect to its share of the partnerships qualifying land remediation expenditure