Land Remediation Relief: Turn contaminated land into a tax opportunity

Are you redeveloping land that’s been affected by industrial use? Cleaning up contaminated land doesn’t just protect the environment, it could also significantly reduce your corporation tax bill or even result in a cash payment from HMRC.

Land Remediation Relief (LRR) is a generous, government-backed incentive that encourages businesses to clean up contaminated land and buildings. If your company is improving land in a contaminated state, you may be entitled to an additional 50% tax deduction or a 16% tax credit if you’re making a loss.

In this article, we’ll explain how the relief works, what qualifies, and how A4G can support you in making a successful claim.

What is Land Remediation Relief?

Land Remediation Relief is a form of corporation tax relief available to UK companies cleaning up contaminated land or buildings acquired in a polluted state.

If your business spends money to remove or contain pollutants such as asbestos, oils, heavy metals, or industrial waste, you can claim:

• 100% of the clean-up costs as normal business expenses, and

• An additional 50% deduction, reducing your taxable profits even further.

That means for every £100 you spend on eligible remediation, you can deduct £150 from your taxable profits.

To qualify, the land or property must be contaminated as a result of past industrial activity and meet one of the following conditions:

• It is currently causing harm

• There is a serious possibility that harm could occur

• It is causing or could cause significant pollution of water (groundwater, streams, rivers, or coastal waters)

What qualifies as remediation expenditure?

Not every environmental project qualifies, but the following costs typically do:

• Site surveys to establish contamination levels
• Removal or containment of harmful substances
• Post-remediation surveys to confirm clean-up success

It’s important to note that you must carry out the remediation work, just identifying contamination isn’t enough to claim relief.

Both capital and revenue costs can qualify, but capital expenditure must be elected for relief within two years of the end of the accounting period.

If you’re unsure what qualifies, our team at A4G can help you identify all eligible costs.

Land Remediation Relief example

Let’s say your company spends £50,000 on qualifying clean-up costs.

• You deduct the full £50,000 as normal

• You also claim an additional deduction of £25,000 (50%)

• That’s £75,000 in total deductions against your taxable profits

If this results in a trading loss of £80,000 and your company has £10,000 of other income, you could surrender the unrelieved £70,000 loss for a tax credit.

• You receive a cash payment of £11,200 from HMRC (£70,000 × 16%)

• The remaining £10,000 loss can be carried forward to future years

That’s real cash back into your business especially valuable during large redevelopment or regeneration projects.

Can I claim a tax credit if my company is loss-making?

Yes. If your company is in a loss position after claiming Land Remediation Relief, you may surrender that loss to HMRC for a cash tax credit worth 16% of the loss value.

You’re eligible to claim this credit if:

• You’re trading or operating a UK property business
• You’ve made a valid claim for the enhanced 50% relief
• You’ve incurred a trading or property-related loss in the same accounting period

This credit is a great option for businesses with upfront costs or those not yet making profits helping to improve cash flow during early stages or large-scale developments.

Why work with A4G?

At A4G, we help ambitious business owners like you make the most of specialist tax reliefs, without the stress.

We’ll handle the process from start to finish:

1. Identify qualifying costs – We review your project costs in detail to ensure you include all eligible remediation expenses.
2. Calculate your relief or tax credit –  We’ll work out the most beneficial claim, whether you’re saving tax or claiming a cash refund.
3. Adjust your tax return – We’ll update your corporation tax return (CT600) and prepare a clear summary to support your claim.
4. Deal with HMRC – We’ll handle any questions from HMRC and provide supporting documentation where needed.

We take care of the details so you can focus on delivering your project.