Land Remediation Tax Relief and Japanese Knotweed: Are you Eligible?
Did you know that property developers and investors can claim tax relief – known as land remediation relief – for reclaiming contaminated land including Japanese knotweed removal? This lucrative tax advantage allows you to reclaim up to 150% of the cost incurred for cleaning neglected and contaminated land and bringing it back into use for future development projects.
This article will tell you everything you need to know about land remediation relief and Japanese knotweed, including who is eligible and how you qualify for this tax benefit opportunity.
What is Land Remediation Relief and What Does it Cover?
Land remediation relief (LRR) can provide tax relief associated with the cost of decontaminating land or buildings, including the removal and treatment of Japanese knotweed and other harmful materials. LRR can be claimed by commercial developers, investors, and property owners who are subject to corporation tax.
Launched by the UK Government to encourage the remediation and development of land and buildings where Japanese knotweed and other contaminants are present, LRR allows claimants to benefit from corporation tax relief up to 150% of the cost involved with cleaning up any contaminated land and structures.
Does Japanese Knotweed Qualify for Land Remediation Relief?
Yes, Japanese knotweed is included in land remediation relief. LRR was introduced by the Finance Act 2001 to encourage the redevelopment of derelict and contaminated land. In 2009, it was extended to include the removal and treatment of Japanese knotweed infestations where it was not planted or spread to a site due to the negligence of the claimant or anyone connected.
The aim of LLR is to regenerate previously derelict or contaminated land by encouraging investment through tax relief on qualifying expenditure associated with decontamination work. Successful claims can deliver significant capital gains tax refunds of up to:
- 150% for the owner occupier or investor.
- 50% for developers.
- 24% for loss making companies through tax credit.
It is possible to claim LLR for developments, regeneration projects, building refurbishments, and fit-outs such as installing floors, ceilings, and partitions. Anyone making a retrospective claim for LLR must do so within three years in order to qualify.
What Work is Covered by Land Remediation Relief?
The list of work covered by LRR is extensive. Any land or buildings can be deemed contaminated if industrial activity has led to contamination which could cause ‘relevant harm,’ or where Japanese knotweed is detected.
There are a host of legal responsibilities associated with stopping the spread of Japanese knotweed onto neighbouring land including the possibility of legal action. Therefore, it is essential to hire a specialist Japanese knotweed company to devise a plan for the safe treatment, removal, and disposal of Japanese knotweed – the costs of which can be offset with Land Remediation Relief.
Qualifying costs for LRR include the removal and treatment of harmful organisms and invasive species such as Japanese knotweed, as well as other naturally occurring contaminants like radon and arsenic. It also includes the removal of asbestos from buildings and buried and below ground redundant structures such as bridges and tunnels, reinforced concrete basements, and all contaminated soil and water.
Land remediation relief can be claimed for the following expenditures:
- Consultancy fees, risk assessments, lab costs and other research activities including the identification of Japanese knotweed.
- Capital expenditure costs including machinery used in the removal and treatment of Japanese knotweed or other contaminants.
- Labour and employment costs including sub-contractors.
Who Can Claim Land Remediation Relief?
LLR can be claimed by property owners, investors, and developers affected by Japanese knotweed and other contaminants including asbestos, radon, and arsenic. The claimant must be the owner at the time of discovery and pay capital gains tax.
To qualify for land remediation tax relief, the business or claimant must meet the following criteria:
- Businesses must be subject to UK corporation tax. Partner companies can make a claim for their share of remediation costs, but individuals do not quality for relief.
- The land is in the UK, owned for trade and business purposes, and was contaminated when acquired from a third party.
- The land is contaminated according to the definition set out in the section below.
- The business must apply for land remediation relief directly or through a contractor such as a Japanese knotweed removal specialist.
What Conditions Apply to Land Remediation Relief and Japanese Knotweed?
You must take immediate action to treat, remove, and dispose of Japanese knotweed in line with Government policy to qualify for LRR. If you delay acting and knotweed spreads to a neighbouring property, you could be ineligible for an LLR tax refund and risk the possibility of legal action being taken against you.
As with any form of tax relief, a series of conditions apply to land remediation relief. To make a successful claim for LRR, a claimant must have spent money on the following:
- Land that is contaminated or there is Japanese knotweed present. The Government defines contaminated land as causing harm, has the serious possibility of causing harm, or is causing or has the possibility of causing harm to groundwater, streams, rivers, and coastal waters.
- The land was acquired for trade or business purposes.
- Remediation costs would have been avoided if the land was not contaminated.
- The land is in the UK.
It’s possible to make a retrospective claim for LRR on completed developments up to three years after completion. The Government also acknowledges land can become contaminated by Japanese knotweed through fly-tipping and other events. In such cases, LLR will cover the contaminated land under your ownership.
When is Land Remediation Relief Not Applicable?
When a company is responsible for any contamination present in land or the presence of Japanese knotweed, it is not eligible for land remediation relief.
LRR is also excluded when:
- Decontamination costs have been subsidised through grant funding.
- The cost of purchasing the land was discounted because of remediation work to treat, remove, and dispose of Japanese knotweed or other contaminants.
Where LRR is not applicable, it is still essential to conduct a full survey for Japanese knotweed and take measures to stop it spreading to neighbouring properties.
How Do I Make a Claim for Land Remediation Relief?
Many property developers, owners, and investors are unaware of LLR or are unsure about the qualifying criteria for making a claim, and therefore could be missing out on substantial tax relief.
To benefit from the cash-incentive scheme, a claim for land remediation tax credit for the removal and treatment of Japanese knotweed, or the decontamination of land, should be made in a CT self-assessment or amended self-assessment.
If you are concerned about the presence of Japanese knotweed on your premises, it is advised to speak to a Japanese knotweed specialist regarding the safe and effective treatment and removal of the invasive plant species.
Book a Japanese knotweed survey before you claim land remediation relief
At Japanese Knotweed Specialists, our PCA qualified professionals will assess your risk and devise a plan for the treatment, removal, and safe disposal of the invasive plant species. Book a survey today
