Tax Incentives for Development of Brownfield land

In October 2007, the Government published a summary of all of the responses it received from its consultation on tax incentives for brownfield land. The Treasury is proposing to extend tax relief for the remediation of contaminated land to include long-term derelict land and the cost of removing Japanese knotweed and withdraw the existing landfill tax exemption for waste arising from the remediation of land. Most responses to the consultation were supportive of the Treasury's proposals. They have said that they are committed to bringing the changes in time for the March 2008 budget.

Under the land remediation tax relief scheme, companies can claim a deduction in corporation tax for capital expenditure incurred in the remediation of certain contaminated sites. At present, the deduction is an amount equal to 150% of the qualifying clean up costs. The proposal is that this is now extended to long-term derelict sites. To qualify the site must have been derelict since 31st March 1998 and the Government would use the English National Land Use Database as its primary source of evidence.

There is a concern by the Treasury that landowners are claiming relief on land which has been remediated but not developed. The Government was thinking of making the relief dependent on the expenditure having been incurred in accordance with the planning permission or obligation. Most respondents thought this was a bad idea.

I will keep you posted on the proposals when these are published.