What is Land Remediation Relief (LRR)?
Land Remediation Relief (LRR) is a tax incentive allowing UK companies to claim a 150% corporation tax deduction for qualifying expenditure incurred in cleaning up land that is contaminated due to previous industrial activity or has been derelict since before April 1998. Loss-making companies can opt for a cash tax credit instead of the enhanced deduction, offering much-needed liquidity for businesses tackling difficult sites.
What’s changed or been under review since LRR was introduced in 2001?
- In 2009, a broader definition of contamination was introduced: Modern relief covers a wider array of harms, including naturally occurring issues like Japanese knotweed, radon, or arsenic.
- In 2011 there was a proposal to abolish the relief, but it was decided that this would undermine the Government’s support for the housing and construction sectors.
2025 update: HMRC consultation and review
In July 2025, HMRC launched a wide-ranging consultation on the future and effectiveness of LRR.
The relief, originally introduced in 2001, revised in 2009, and last reviewed in 2011, remains a pivotal tool in the UK’s brownfield-first development strategy. The government seeks input on:
- LRR’s impact on brownfield site development.
- How LRR shapes business decisions.
- Potential barriers to claiming, such as:
- Which activities are (or aren’t) covered.
- The eligibility definition and cut-off for “derelict land.”
- The “continuous use” requirement: which disqualifies land that has been in productive use for more than 7 days a year.
- Rules excluding polluters from claiming the relief.
- How robust LRR is against potential abuse or error.
The consultation closes on 15 September 2025, at which point recommendations for reform may be made.
How can clients benefit in 2025?
PEM’s previous article accurately describes the core provisions of LRR, which remain intact today:
- LRR applies only to limited companies, not individuals or partnerships.
- Relief comes as a 150% deduction from profits or, if the company is loss-making, a cash tax credit.
- Claims relate to remediation required due to contamination from industrial uses.
How can PEM help you?
- Assess eligibility early: Check eligibility as soon as remediation is contemplated. Clients must be UK corporations who acquire land in a contaminated or long-derelict state, not responsible for causing the problem.
- Claim all qualifying costs: Allowable costs include site surveys, actual remediation work, removal/treatment of contaminated soil, and more. Both capital and revenue expenditures can qualify, with capital expenditure potentially claimed as a deduction by election.
- Time your claim: Relief must be claimed within the statutory period, no later than two years after the end of the accounting period when expenditure is incurred (or goes through the profit and loss account where the costs are initially in stock/work in progress). Miss the deadline and the relief is lost.
- Make use of the tax credit: Loss-making companies can generate valuable cash refunds, boosting liquidity.
- Stay alert to upcoming changes: With the 2025 consultation, rules may soon broaden or tighten. Clients should continue to engage with their advisors to ensure they benefit from any new opportunities or are prepared for changes.
Learn more and get advice
Get in touch with PEM if you’re seeking to optimise your tax position or considering development on contaminated or derelict land.
The content in this article is correct on the date of publishing. This content is not intended to give specific technical advice. It is designed to highlight some of the key issues rather than provide an exhaustive explanation of the topics. Professional advice should always be sought before action is either taken or refrained from as a result of information contained herein.
