LRR is a corporation tax relief for companies that incur qualifying expenditure on remediating contaminated land or buildings. Where available, it can provide an enhanced deduction and, for loss-making companies, a payable credit where the relevant conditions are met.
The relief can apply to costs associated with removing, containing or treating contamination such as asbestos, hydrocarbons, heavy metals and other harmful substances. It is often relevant to acquisitions, redevelopment projects and refurbishment works involving historic contamination.
The company, or a connected party, must not have caused the contamination. The expenditure must be qualifying remediation expenditure, and statutory exclusions can apply. The facts around the source, nature and treatment of the contamination are therefore critical.
LRR can interact with capital allowances, revenue deductions and wider project cost allocations. A cost may need to be analysed carefully to determine whether it is remediation expenditure, plant and machinery expenditure, structural expenditure or another category of spend.
Strong evidence is essential. Environmental reports, asbestos surveys, contractor descriptions, remediation strategies and cost breakdowns should be reviewed to support both eligibility and quantum before the claim is made.