Benefits to Developers
Any property developer building on a brown field site may encounter contamination, all or part of which falls within the scope of the tax relief.
Irrespective of whether the development is commercial or residential it is possible to reduce the clean up costs by as much as 14% as illustrated by the following example.
Company A acquires contaminated land as trading stock and incurs £100,000 of qualifying land remediation expenditure in the accounting period. It treats the expenditure as a revenue deduction in its profit and loss account and can claim a further deduction of £50,000 in its Case 1 tax computation, giving it a total enhanced deduction of £150,000 against profits in the accounting year of sale. At a corporate tax rate of 28% this is equivalent to 14% of cost.
The developer must have a major interest in land and will not be able to claim the relief if the remediation works are being undertaken for the owner of the site rather than on the developers own account.