Land Remediation Relief is one of the most valuable — and most overlooked — reliefs available to companies that acquire and develop contaminated or derelict land. It gives a 150% corporation tax deduction for qualifying clean-up costs, and loss-making companies can surrender the loss for a payable tax credit. On a large brownfield project the numbers are material: qualifying spend of several million pounds can translate into a seven-figure cash benefit. Yet it sits outside capital allowances, is claimed differently, and is routinely missed by advisers who stop at the capital allowances review.
This guide explains what qualifies, how the relief and the payable credit work, the traps that lose claims, and how Land Remediation Relief sits alongside — not instead of — your capital allowances claim on the same project.
📌 The headline
Land Remediation Relief gives companies a 150% deduction for cleaning up contaminated or derelict land — the £1 spent, plus an extra 50p of relief. Loss-making companies can claim a payable credit of 16% of the qualifying loss surrendered. It is a corporation tax relief only: individuals, partnerships and trusts do not qualify.
What Land Remediation Relief is
Land Remediation Relief (LRR) was introduced to encourage the redevelopment of contaminated and long-term derelict land. The policy logic is straightforward: cleaning up a brownfield site costs more than building on a greenfield one, so the tax system offsets some of that cost to keep regeneration commercially viable.
Mechanically, it is a super-deduction. Where a company incurs qualifying expenditure on remediating land, it can deduct 150% of that expenditure in computing its taxable profits — the actual cost plus an additional 50%. For a company paying corporation tax at 25%, that turns a £1,000,000 clean-up into a £375,000 tax saving, rather than the £250,000 a normal deduction would give.
Who qualifies
LRR is available only to companies within the charge to UK corporation tax. That is the first and most common disqualifier: a great deal of property is held by individuals, partnerships and trusts, none of which can claim. If a development is being run through a partnership or an individual's name, the relief is simply unavailable — a point worth checking at the structuring stage, not after the spend.
Both property investors and property developers can claim, though the mechanics differ slightly. For an investor holding the land as a capital asset, the relief is given against income. For a developer holding land as trading stock, qualifying remediation costs can attract the additional 50% deduction as a trading expense. The distinction matters for how and when the relief is claimed, and it is one of the areas where the structure of the group and the characterisation of the activity drive the outcome.
⚠️ The "polluter" exclusion
A company cannot claim LRR for cleaning up contamination it caused itself. The relief is aimed at the party that acquires land already in a contaminated or derelict state and cleans it up — not the party responsible for the pollution. If the same group both contaminated and now remediates the land, the relief is likely to be denied.
What expenditure qualifies
Qualifying expenditure falls into two broad categories: contaminated land and long-term derelict land. The rules for each differ, and the derelict-land route in particular is frequently missed.
Contaminated land
Land is "contaminated" for LRR purposes where there is something in, on or under it that is causing — or has a serious possibility of causing — harm, or polluting controlled waters. Typical qualifying remediation includes:
- Removal or treatment of asbestos in buildings and land
- Removal of hydrocarbons, heavy metals, and other pollutants from soil and groundwater
- Treatment of Japanese knotweed and other harmful invasive plants
- Removal of buried structures, tanks and foundations left by former industrial use
- Treatment of naturally occurring contaminants such as radon, arsenic or methane (subject to conditions)
Long-term derelict land
Separately, land that has been derelict since at least 1 April 1998 — and out of productive use throughout — can qualify for relief on certain remediation costs even without contamination. This includes the removal of redundant structures such as foundations, machinery bases, and below-ground obstructions from former industrial sites. Because the qualifying test is dereliction rather than pollution, this route is easy to overlook, yet it can unlock relief on demolition and clearance costs that would otherwise attract nothing.
Sitting on a brownfield project?
A focused review can tell you quickly whether Land Remediation Relief is on the table — and how it stacks with your capital allowances claim.
The payable tax credit for loss-makers
The feature that makes LRR genuinely valuable to developers is the payable tax credit. Development companies are frequently loss-making in the years they incur remediation costs — the spend comes long before the sales. A relief that only reduces taxable profit is worth nothing to a company with no profit to shelter.
LRR solves this. A company can surrender a qualifying land remediation loss in exchange for a cash payment from HMRC of 16% of the loss surrendered. The surrenderable loss is based on the 150% relief, so the credit reaches parts of a project that would otherwise generate no immediate benefit at all.
🧮 Worked example — a brownfield development
A development company acquires a former industrial site and incurs £4,000,000 of qualifying remediation costs (asbestos removal, contaminated soil treatment, and clearance of long-derelict foundations).
- Base deduction: £4,000,000
- Additional 50% LRR uplift: £2,000,000
- Total deduction: £6,000,000
If the company is loss-making and surrenders the qualifying loss, the payable credit is 16% × £6,000,000 = £960,000 in cash from HMRC — money in the bank while the development is still in progress, rather than a deduction it cannot yet use. If instead the company is profitable, the £6,000,000 deduction saves £1,500,000 of corporation tax at 25%.
Illustrative figures. The actual benefit depends on the qualifying analysis, the company's tax position, and how the spend is categorised.
Land Remediation Relief vs capital allowances
This is where claims are won and lost. On a single development project, the same overall spend can give rise to both capital allowances and Land Remediation Relief — but not on the same pound twice. The two reliefs cover different costs, are claimed under different rules, and are often reviewed by different people (or, too often, only one of them is reviewed at all).
| Capital allowances | Land Remediation Relief | |
|---|---|---|
| What it covers | Plant, machinery, integral features, structures (SBA) | Cleaning up contamination and long-term dereliction |
| Rate | Up to 100% (AIA / full expensing); 6%–18% WDA | 150% deduction |
| Who can claim | Companies, individuals, partnerships | Companies only |
| Loss-maker cash credit | No (allowances carried forward) | Yes — 16% payable credit |
| Typical reviewer | Capital allowances specialist / surveyor | Frequently missed entirely |
The practical point: a proper review of a development project looks at both in the round, allocating each cost to the relief that gives the best-supported result, and making sure nothing is double-counted. A review that stops at capital allowances — which is the norm — leaves the remediation relief on the table. Getting the split right is exactly the kind of judgement that separates a full claim from a partial one.
How to claim — and what protects it
LRR is claimed through the company's corporation tax return (CT600), but the timing depends on how the land is held — and getting this wrong is a common mistake. An investor or owner-occupier holding the land as a capital asset must elect to claim in the accounting period the qualifying expenditure is incurred, within two years of the end of that period. A developer holding land as trading stock claims differently: the base cost is written off to the profit and loss account as normal, and the additional relief is effectively realised in the period the property is disposed of. Where a loss-making company surrenders the qualifying loss for the payable credit, that is claimed in Box 550 of the CT600.
What protects a claim is evidence: a documented analysis of the site's contaminated or derelict state (often supported by an environmental or ground survey), a clear allocation of costs to qualifying categories, and a defensible split between LRR and capital allowances. Where the numbers are large, that documentation is also what stands up if HMRC asks — which, on seven-figure claims, they may.
✅ Key takeaways — Land Remediation Relief
- LRR gives a 150% corporation tax deduction for cleaning up contaminated or long-term derelict land
- Loss-making companies can surrender the loss for a 16% payable cash credit — valuable to developers who spend before they profit
- Companies only — land held by individuals, partnerships or trusts does not qualify; check at the structuring stage
- The derelict-since-1998 route is separate from contamination and frequently missed — it can cover demolition and clearance
- You cannot claim for contamination you caused yourself
- LRR sits alongside capital allowances on the same project — a full review claims both, without double-counting
- Claimed on the CT600, with a two-year window; evidence and a defensible cost split protect it
Frequently asked questions
What is Land Remediation Relief?
A corporation tax relief giving a 150% deduction for the cost of cleaning up contaminated or long-term derelict land. Loss-making companies can surrender the loss for a payable cash credit of 16%. It is available to companies only, not individuals or partnerships.
How much is Land Remediation Relief worth?
For a profitable company, the 150% deduction saves corporation tax at 25% on 1.5× the qualifying spend — so £1,000,000 of remediation gives a £375,000 tax saving. For a loss-making company, the payable credit is 16% of the surrendered loss, giving cash from HMRC while the project is still running.
Can I claim Land Remediation Relief and capital allowances on the same project?
Yes — but not on the same expenditure twice. The two reliefs cover different costs (capital allowances for plant, fixtures and structures; LRR for remediation of contamination and dereliction). A proper review allocates each cost to the relief that gives the best-supported result, without double-counting.
Does derelict land qualify even if it is not contaminated?
Yes. Land that has been derelict since at least 1 April 1998 and out of productive use can qualify for relief on certain clearance costs — such as removing redundant foundations and below-ground structures — even without contamination. This route is separate from the contamination rules and is frequently missed.
Who cannot claim Land Remediation Relief?
Individuals, partnerships and trusts cannot claim — it is a corporation tax relief for companies only. A company also cannot claim for cleaning up contamination it caused itself; the relief is aimed at the party that acquires already-contaminated or derelict land and remediates it.
How is Land Remediation Relief claimed?
Through the corporation tax return (CT600). Investors and owner-occupiers elect to claim in the accounting period the spend is incurred, within two years; developers realise the additional relief in the period of disposal. A loss-making company's payable credit goes in Box 550. Evidence of the site's condition and a clear cost analysis protect the claim.
📚 Related reading
- Should You Incorporate Your Portfolio? — Capital allowances are available to companies on the same basis as individuals — but the structure shapes everything else.