Land remediation relief reform moves closer

The government has confirmed that there is a compelling case to reform land remediation relief (LRR). The June 2026 summary of responses, following the consultation launched in July 2025, also confirms that further industry engagement is expected.

The response identifies limits in the current regime, including narrow eligibility, timing issues, complexity, and the evidence needed to support claims.

Why is LRR under review?

LRR is a Corporation Tax relief set out in Part 14 of CTA 2009. It applies to qualifying expenditure on contaminated or derelict land. Loss-making companies may also be able to surrender losses for a payable credit.

The government’s response says LRR is not materially meeting its objective of incentivising brownfield development. It also notes that the relief can still support some marginal or highly contaminated sites.

What the government heard

Respondents indicated that LRR is rarely incorporated into early site appraisals. Qualifying costs can be difficult to estimate before intrusive surveys, and the tax benefit may be delayed.

They also raised concerns about the derelict land rules, including the requirement to evidence dereliction since 1 April 1998. The ‘polluter pays’ and major interest rules were also identified as potential barriers.

Another clear theme was record-keeping. Remediation costs are often bundled into wider construction costs, making it difficult to identify and support qualifying expenditure after the event.

Evidence and cost records

The response highlights practical difficulties in preparing claims. Remediation costs are often embedded within wider contractor pricing. Claims may be reviewed only after completion, when supporting records are harder to analyse.

Companies must separate qualifying and non-qualifying costs, capital and revenue items, and spend that may instead fall within capital allowances under CAA 2001.

Relevant evidence may include site investigations, remediation strategies, method statements, contractor breakdowns, contaminated land reports and apportionment support.

What should businesses do now?

Businesses undertaking or planning remediation projects should assess LRR at the acquisition, design, procurement and construction stages. Contracts and cost schedules should help identify remediation works separately from general development, demolition, enabling works, plant and machinery, and non-qualifying expenditure.

Conclusion

The government has not confirmed specific reforms. Further industry engagement is expected, and businesses should monitor the next stage of consultation closely. In the meantime, maintaining accurate records remains important. Clear evidence supports existing claims, reduces error risk and positions businesses to respond to any LRR rules change.