Can you Find it – Business © 2017 THE FULL STORY…CASH IN ON TAX BREAKS FOR BROWNFIELD DEVELOPMENTPublished in Can you find it Business Edition on Wednesday, November 2nd 2015
THE spiralling cost of town and city centre housing could mean the time is ripe for Londonn businesses to cash in on generous tax breaks for cleaning up contaminated land. Companies redeveloping brownfield sites can reduce their tax bills by 150 per cent of the clean-up cost.
“The incentive to decontaminate becomes even more attractive, given the high demand for development sites for ‘key worker’ housing in urban areas,” said Mike Harrison, a partner at the Manchester office of accountants Saffery Champness.
“We are already witnessing considerable political pressure for affordable homes due to many key workers, such as teachers and nurses, being priced out of town and city housing markets, and this could be a profitable niche for remediated land.”
Further encouragement to take advantage of the tax break comes from a major government initiative to bring England’s 164,000 acres of brownfield land back into beneficial use.
Fourteen pilot initiatives – including schemes in Barrow – have been launched by English Partnerships, as part of the development of a national brownfield strategy, and more North West projects may follow.
Tax relief means 150 per cent of capital costs relating to remediation can be deducted from tax bills. If the company makes a loss after these extra costs have been taken into account, it can claim the cash as a tax credit.
Although nuclear sites are specifically excluded, the definition of contaminated land includes a huge range of polluting substances, from industrial chemicals to farm slurry, creating immense scope for businesses to benefit from the tax break.
Mike Harrison continued: “Land remediation relief can only be claimed by a company that occupies the land for its own trade, or acquires it for business purposes. A company will only obtain tax relief for the capital cost of clearing up a contamination when the land is sold, but if it elects within two years of the end of it’s accounting period, it can deduct capital expenses connected with land remediation from profits in the period they are incurred.”
“The claimant company must have an interest in the land, but it does not have to own the freehold, so a corporate leaseholder of a building could claim the tax relief. However, the claimant company must not have caused the contamination in the first place.”
Qualifying costs include preparatory work such as investigating and assessing land before action is taken.
Mike Harrison added: “Land remediation relief is only available to commercial companies, which seems very unfair on partnerships, individuals and trustees who may also have interests in cleaning up contaminated land or buildings. This could be interpreted as yet another push towards incorporating the entire UK environment business.”