Following government consultation on Land Remediation Relief in Spring 2025, Lovell Consulting understands the responses are now published. Background and key findings are listed below. Link to full publication: https://assets.publishing.service.gov.uk/media/6a2826256d178a6fb7e31fa0/SoR_TU_Land_Remediation_Relief.pdf

What is Land Remediation Relief (LRR)?

• • Form of revenue expense aimed for companies to incentive the regeneration of brownfield sites.

• • Usually, revenue expense allows companies to deduct 100% of cost against profit and loss account.

• • LRR provides an additional 50% deduction (or 16% cash tax credit for loss making companies) on qualifying expenditure.

• • Qualifying expenditure may apply to cleaning contaminated land, removing hazardous materials and demolishing derelict buildings.

• • Companies must not be original polluters (including connected entities).

Below are some key responses from businesses, advisors, representative bodies and academics.

Positive findings

• • LRR amounts can be material for marginal or heavily contaminated sites, which helps supports working capital and sometimes even supporting project viability by mitigating exposure to unforeseen costs.

• • Several respondents consider the legislation well understood and not unduly complex.

• • LRR is considered more accessible, non-competitive and consistent than grants.

• • Respondents value the predictability of tax outcomes which can be factored into financial models.

Negative findings

• • Rules for claiming LRR are considered too complex, narrow and ambiguous in regards to timing, qualifying expenditure etc.

• • Requirements for evidence and difficulty in obtaining subcontractor information can make it hard to support claims. Often time eligible costs may be lumped into wider costs and not clear how much actually was spent on LRR.

• • Many suggested that projects they deem should qualify for LRR are excluded, particularly around polluter pays rules, requirement for claimant to hold a major land interest and evidence of non-use for derelict land since 1 April 1998.

• • Timing of relief for developer-traders are seen as too long, due to the fact they cannot access until the homes are sold. Many, therefore, favoured moving the relief to an above-the-line tax credit model.

• • Restrictions on qualifying expenditure due to exclusion of non-corporate members, overheads and indirect costs and subsidised costs from grants.

Other key points

• • Many believed eligible brownfield and derelict land has declined over time due to remediation of sites and noted that local brownfield registers are incomplete and inconsistent. Additionally, fixed dereliction date of 1 April 1998 prevents new lands from qualifying.

• • Most sites only 1-2% of total project expenditure relates to LRR.

• • Disparity between housebuilders (recovering 12.5% to 14.5% of qualifying costs) and investors (up to 37.5%) means the relief is less effective for housing delivery.

• • The narrow scope for relief and need for technical documentation to support claims makes LRR less vulnerable to abuse than say research & development claims.

• • Common misunderstandings for claims include claiming on ineligible works, failing to apportion mixed costs and misunderstanding polluter pays rule.

Conclusion and LC Comments

Following the consultation, the government accepts there are limitations in the current regime – LRR may not be meeting its intended objective of incentivising brownfield development and therefore will be exploring viable and cost-effective reforms in the coming months. Lovell Consulting welcomes changes to the current regime, particularly expanding on the list of qualifying expenditure and removing the derelict land fixed date.

If you have any queries, Lovell Consulting will be pleased to discuss 0207 329 1300.