Aug 11
HM Treasury’s second consultation on Land Remediation Relief is open until 21 September 2026. It considers three main changes: aligning contamination rules more closely with planning processes, updating the treatment of long-term derelict land, and allowing earlier relief for some developers. Responses can be emailed to LRR@hmtreasury.gov.uk.
Land Remediation Relief is a Corporation Tax relief intended to encourage redevelopment of contaminated and derelict land. The government’s 2025 consultation cited 1,750 claims worth £50 million in the latest year then available. Its June 2026 review concluded that the relief can help marginal or heavily contaminated projects but is not fully achieving its objective.
For developer traders, remediation costs can remain in work in progress until units are sold. The Treasury says respondents reported an average three-to-five-year delay between expenditure and relief. This helps explain why businesses may not build Land Remediation Relief into a site appraisal at the outset. Similar pressures affect contractor margin pressure and decisions around capital allowances on development spend.
| Proposal | Potential change | Useful evidence |
|---|---|---|
| Planning alignment | Align eligible contamination more closely with planning and environmental processes | Examples where tax and planning treatment differ |
| Derelict land | Remove the 1 April 1998 test and use a new definition, or update the qualifying date | Sites excluded because they became derelict later |
| Timing | Let developer traders elect for qualifying revenue expenditure to be relieved when incurred | Cash-flow evidence showing the current delay |
| Transition | Preserve existing treatment for expenditure before a specified date | Pipeline evidence showing how much notice is needed |
Current rules generally require derelict land to have been continuously derelict since 1 April 1998. The consultation also considers retaining 150% relief for qualifying older derelict sites while potentially limiting relief to 100% for sites becoming derelict after 2027. Businesses should consider these proposals alongside Capital Goods Scheme rules for property and the 2026 capital allowance changes.
Qualifying revenue expenditure can receive the normal 100% deduction plus an additional 50% deduction. Qualifying capital expenditure can receive a 150% deduction where it is not eligible for capital allowances. Loss-making companies may surrender qualifying losses for a 16% payable tax credit.
The relief is available within Corporation Tax. Individuals and partnerships cannot claim directly, although a corporate member of a partnership may potentially elect for its share.
Northern Ireland falls within the UK Corporation Tax regime, and the consultation proposes using relevant planning and environmental frameworks across England, Scotland, Wales and Northern Ireland.
The Republic of Ireland is pursuing a different approach through a Revenue-collected Derelict Property Tax intended to replace the Derelict Sites Levy. The Irish Government has said the new rate will not be lower than the current 7% levy, with preliminary registers planned for 2027. Cross-border developers should consider cross-border accounting and tax advice.
Use a live project rather than a theoretical example. Separate remediation expenditure from demolition, enabling works and plant, and show when costs arose compared with when current rules provide relief. Accurate cost allocation also matters for R&D tax relief claims and a stalled site that needs restructuring. Where costs are disputed, forensic accounting and financial investigations can help establish the evidence.
The full consultation on reforming Land Remediation Relief contains 35 questions, but businesses can focus on those relevant to their circumstances.
Companies within the charge to UK Corporation Tax can potentially claim if the statutory conditions are met. Individuals and partnerships cannot claim directly.
Current rules provide an additional 50% deduction for qualifying revenue expenditure and a 150% deduction for eligible capital expenditure. A 16% payable credit can apply to qualifying surrendered losses.
Generally no. Current rules restrict relief where the company, or certain connected parties, caused the contamination or dereliction. ICAEW’s summary of the proposals provides an additional overview.
No. The government plans to consider responses, set out its conclusion at Budget 2026 and, if it proceeds, legislate through Finance Bill 2026. Transitional arrangements are also being considered.
SCC Chartered Accountants’ SME business advisory services can help developers assess the current relief and prepare evidence. Where a project is under pressure, business recovery and restructuring specialists can review viability alongside the tax position. Speak to our chartered accountants in Northern Ireland, Ireland and the UK before the consultation closes.
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