Claiming Land Remediation Relief: Contaminated or Derelict Sites

A company that spends £50,000 cleaning up land it bought in a contaminated state can deduct £75,000 from its taxable profits, because Land Remediation Relief adds 50% to a 100% deduction for qualifying expenditure (HMRC CIRD60015, checked 27 October 2026). A land remediation relief claim on capital spend depends on an election made within two years of the end of the accounting period (HMRC CIRD60075), and on a large site that window can close before the development is finished.

The relief turns on statutory land remediation relief conditions written in tax language: what counts as contaminated or derelict land, which costs qualify, and which companies are shut out. Each test is set out below with its HMRC manual page, followed by the rates, the three deadlines, a worked example and how to claim land remediation relief on the return.

What Is Land Remediation Relief?

What is land remediation relief? HMRC's manual describes it as "a relief from corporation tax only", giving a deduction of 100% plus an additional deduction of 50% for qualifying expenditure a company incurs cleaning up land acquired from a third party in a contaminated state (CIRD60015). For expenditure incurred on or after 1 April 2009, the same relief covers bringing long-term derelict land back into productive use (HMRC CIRD68000).

The relief works differently for revenue and capital spend. Revenue spend is already deductible, so the relief adds the extra 50%. Capital spend would normally get no deduction at all, so a company that elects to treat it as a deduction gets the full 150% (HM Treasury, "Land Remediation Relief: Summary of Responses", June 2026, paragraph 1.3). A company that makes a loss can surrender the part of the loss that comes from the relief for a cash payment, the land remediation tax credit (CIRD60015).

Only companies can claim. Individuals and partnerships holding property outside a company pay income tax rather than corporation tax, so the relief does not reach them.

The Legislation Behind the Relief

In law, the answer to what is land remediation relief sits in Part 14 of the Corporation Tax Act 2009, and the land remediation relief legislation also includes the statutory instruments made under it (HM Treasury Summary of Responses, June 2026, paragraph 1.2). The sections a claimant meets most often are:

• CTA09 s1144: what counts as qualifying land remediation expenditure (HMRC CIRD63050);
• CTA09 s1145 and s1145A: the meaning of contaminated land and derelict land (HMRC CIRD61220, CIRD62001);
• CTA09 s1150: the polluter-pays exclusion (HMRC CIRD60120);
• CTA09 s1151 to s1154: the tax credit for loss-making companies (HMRC CIRD68000, CIRD68025);
• CTA09 s1170 and s1171: staffing costs and the 80:20 rule (HMRC CIRD69030).

The claims rules come from Finance Act 1998 Schedule 18, which sets the general four-year time limit for claims (paragraph 55) and the rules for the tax credit claim (paragraph 83H).

What Counts as Contaminated or Derelict Land

Land qualifies under one of two legs: it is in a contaminated state, or it is long-term derelict. A site does not need to meet both tests, and HMRC's manual has separate chapters for each (CIRD61205 for contaminated land, CIRD62001 for derelict land).

Test	Contaminated land	Derelict land
Core condition	Something in, on or under the land causes relevant harm, or a serious possibility of relevant harm exists	Not in a productive state, and cannot be made productive without removing buildings or other structures
Source or age	Present as a result of industrial activity	Derelict since 1 April 1998
Extensions and limits	Arsenic, radon and Japanese knotweed added by Treasury Order; living organisms and burials excluded	Use of less than seven days a year can be ignored
Qualifying works	Establishing, removing or containing the contamination	A closed list: foundations, pilecaps, basements, redundant services and similar
HMRC source	CIRD61205, CIRD61220, CIRD61250	CIRD62001, CIRD62010, CIRD62035

Contaminated Land: The Relevant Harm Test

Remediation of contaminated land tax relief applies only where the land is in a contaminated state, which HMRC defines as land with something in, on or under it that causes "relevant harm", or where a serious possibility of relevant harm exists (CIRD61205). Relevant harm includes significant adverse impact on the health of humans or animals, and damage to buildings that has a real impact on how the building is used (CIRD60015). Significant pollution of groundwater, streams, rivers or coastal waters, or a serious possibility of it, also counts.

The contamination must be present as a result of industrial activity (CIRD61250), although the site itself need not have been industrial. HMRC's own example is an office building with asbestos panelling that has deteriorated to the point where it must be removed: the asbestos is there because of the construction industry, so a company that bought the offices from an unconnected third party can claim on the extra cost of removal (CIRD61250).

The Treasury has extended the relief to arsenic, arsenical compounds, radon and Japanese knotweed (CIRD61205). Living organisms and decaying matter from them are excluded, so removing burials or animal droppings does not qualify (CIRD61220). Diesel and petrol are treated as too remote from their organic origin to fall under that exclusion, but hydrocarbons present through natural processes do not qualify.

Derelict Land: The Long-Term Test

The land remediation relief derelict land test has two parts. The land must not be in a productive state, and it must be impossible to put it into a productive state without removing buildings or other structures (CTA09 s1145A; HMRC CIRD62001). "Productive" is read widely: a car park or retail premises is in economic use, and housing or a recreational area is in social use.

The land must also have been derelict since 1 April 1998 (CTA09 s1149(3); HMRC CIRD62010). A site that fell vacant after that date does not qualify, however run-down it now is. Very limited use can be ignored where it is under seven days a year and the income is not substantial (CIRD62001).

HMRC points to the English National Land Use Database and the Scottish Vacant and Derelict Land Survey as evidence that land has been derelict for that long (CIRD62010). Even where the site qualifies, the works list is closed (CIRD62035):

• removal of post-tensioned concrete heavyweight construction;
• removal of building foundations and machinery bases;
• removal of reinforced concrete pilecaps;
• removal of reinforced concrete basements;
• below-ground removal of redundant services (gas, water, drainage, sewerage, electricity and telecommunications only).

HMRC states that other, seemingly similar work does not qualify "by analogy" (CIRD62035).

Which Clean-Up Costs Qualify

What qualifies for land remediation relief is set by CTA09 s1144. The spend must be on UK land acquired for a trade or property business carried on by the company, and it must meet every one of these land remediation relief conditions (HMRC CIRD63050):

• it is incurred on land all or part of which is contaminated or derelict;
• it would not have been incurred if the land had not been contaminated or derelict;
• it is spent on remediation the company itself undertakes;
• it falls into one of four categories: staffing costs, materials, remediation contracted out to an unconnected person, or qualifying connected sub-contracted remediation;
• it is not subsidised;
• it is not landfill tax.

The second condition is the one that splits invoices. A contractor's invoice for groundworks on a brownfield site will mix the cost of removing contaminated soil with ordinary excavation that any development needs, and only the first part qualifies. HMRC adds that the cost of establishing the level of contamination counts, as does removing it or containing it, but there is no relief if the remediation work is never carried out (CIRD60015).

Staffing costs cover salaries, secondary Class 1 National Insurance, pension contributions and reimbursed expenses for directors and employees directly and actively engaged in the remediation (HMRC CIRD69030). The 80:20 rule then applies to anyone working on it part-time:

• under 20% of their working time in the period: none of their costs qualify;
• over 80%: all of their costs qualify;
• anything in between: an appropriate proportion.

Secretarial and administrative staff never qualify, and benefits in kind are excluded (CIRD69030).

Capital spend sits on one more boundary. A company cannot elect to treat capital expenditure as a land remediation deduction if it could claim capital allowances on it, and HMRC's list of the allowances that block the election includes plant and machinery allowances and business premises renovation allowances (CTA09 s1147(8); HMRC CIRD60085). Where a new structure goes up on the cleaned site, the allowance for the building itself is covered in Claiming Structures and Buildings Allowance on a New Build or Extension.

How the Numbers Work: The 150% Deduction and the 16% Credit

The land remediation relief tax credit and the deduction serve two kinds of company. A profitable company takes the 150% deduction against its profits. A loss-making company can surrender its "qualifying land remediation loss" for a payment of 16% of the loss surrendered (HMRC CIRD68025), a rate HMRC says has been unchanged since the relief was introduced. The credit is not taxable income for the company (HMRC CIRD68000).

The land remediation relief rates on £50,000 of qualifying capital spend work out as follows:

	Profitable company (25% main rate)	Loss-making company
Qualifying spend	£50,000	£50,000
Deduction at 150%	£75,000	£75,000
Value	£75,000 × 25% = £18,750 tax saved	Up to £75,000 × 16% = £12,000 credit
As a share of spend	37.5%	Up to 24%

The 25% rate is the main rate for companies with profits over £250,000; profits of £50,000 or less pay the 19% small profits rate, with marginal relief in between (GOV.UK, "Corporation Tax rates", checked 27 October 2026). The credit is capped because the qualifying loss is the lower of the company's unrelieved trading or property loss and 150% of the qualifying spend (HMRC CIRD68005).

A company does not have to surrender the whole loss. In HMRC's own example, a company with a £75,000 qualifying loss claims a credit of £8,000, which uses £50,000 of that loss (£50,000 × 16%), and carries the rest of its trading loss forward (CIRD68020). Whether this credit can sit alongside R&D or other reliefs on the same expenditure is a separate question, covered in Can You Claim More Than One Tax Relief in the Same Year?

Who Can Claim Land Remediation Relief

Who can claim land remediation relief comes down to four tests. The claimant must be a company within the charge to UK corporation tax (CIRD60015), and it must have acquired a major interest in UK land (HMRC CIRD60051). A company has a major interest if it owns the land, is granted a lease of at least seven years, or is assigned a lease with at least seven years remaining (HMRC CIRD69015).

The land must have been acquired already contaminated or derelict. The one exception is Japanese knotweed, which can qualify even if it arrived after acquisition, because it is often spread by fly-tipping (CIRD60051). A company that lets an infestation spread without acting is treated as the polluter for that knotweed (HMRC CIRD60025).

HMRC lists four exclusions (CIRD60100):

• Polluter pays. A company that was responsible in any way, by action or inaction, for the contamination or dereliction cannot claim, and nor can one connected to the polluter (CIRD60120).
• Landlords and tenants. A landlord cannot claim for cleaning up contamination caused by its tenant, though it can claim for contamination already present when it bought the property from an unconnected seller (HMRC CIRD60190).
• Nuclear sites. Cleaning up a nuclear site is excluded.
• Arrangements. Relief is denied where arrangements were put in place to create or enhance a claim.

The landlord rule matters most to an investor that redevelops a site it has let. HMRC's example is a landlord that buys out a polluting tenant's lease and redevelops: it cannot claim, because the site was clean when it acquired its interest and it allowed the polluting process to continue (CIRD60190).

How to Claim and When: The Deadlines That Matter

How to claim land remediation relief depends on the type of spend. HMRC does not prescribe a form: a computation that reflects the claim and is submitted in time is enough, made in the company tax return or an amended return (HMRC CIRD60060). The election, the additional 50% and the tax credit each have their own deadline.

Claim	Deadline	Source
Election to treat capital spend as a deduction	Within two years of the end of the accounting period	HMRC CIRD60075
Claim for the additional 50%	General four-year time limit: four years from the end of the accounting period	HMRC CIRD60060, CTM90610; FA 1998 Sch 18 para 55
Land remediation tax credit	In the return, by the first anniversary of the filing date	HMRC CIRD68030; FA 1998 Sch 18 para 83H

HMRC's example of the two-year election is a company with an accounting period ended 31 December 2023 that incurs £50,000 of qualifying capital spend: it must elect by 31 December 2025 (CIRD60075). The election must specify the accounting period and be made in writing to HMRC, though HMRC accepts a timely computation reflecting the claim as sufficient notice.

The tax credit deadline runs from the filing date, which is 12 months after the end of the accounting period (GOV.UK, "Company Tax Returns", checked 27 October 2026). For a period ended 31 December 2025, that puts the filing date at 31 December 2026 and the last day to claim the credit at 31 December 2027, the same day the capital election falls due. HMRC can accept a late credit claim at an officer's discretion, broadly following Statement of Practice SP5/01 (CIRD68030).

Revenue spend has its own timing rule. Relief falls in the period in which the expenditure is deducted under generally accepted accounting practice (HMRC CIRD60055). In HMRC's example, a housebuilder that carries clean-up costs as work in progress in year one and sells the houses in year two can claim only in year two, and a claim for any other year fails.

HMRC's Manual and the 2025-26 Review

The land remediation relief HMRC guidance sits in the Corporate Intangibles Research and Development manual, from CIRD60000 onwards, which HMRC last updated on 25 August 2026 (GOV.UK, checked 27 October 2026). HMRC's guidance on how to claim land remediation relief is at CIRD60060 for claims, CIRD60075 for the election and CIRD68030 for the credit.

HM Treasury consulted on the relief from 21 July to 15 September 2025 and received over 30 responses (Summary of Responses, June 2026, paragraphs 1.5 and 2.1). The summary, published on GOV.UK on 23 June 2026, found the relief was not meeting its objective of encouraging brownfield development, but that it gives "meaningful relief" on marginal or heavily contaminated sites (paragraph 4.2). It recorded the common errors in claims: claiming for ineligible works, failing to apportion mixed costs, misunderstanding the polluter-pays rule, and applying the guidance incorrectly (paragraph 3.14).

A second consultation, "Consultation on Reforming Land Remediation Relief", ran from 13 July to 21 September 2026 (GOV.UK, checked 27 October 2026). It sought views on three options:

• aligning the contamination test with the definitions local authorities use in planning;
• removing the 1 April 1998 date for derelict land and replacing it with a new definition, with a 100% rate under consideration for sites that become derelict after 2027;
• letting companies deduct qualifying revenue spend in the year it is incurred, rather than when the finished buildings are sold.

The government says it will proceed only if the reforms are cost-effective, with transitional arrangements for spend incurred before a set date. As of 27 October 2026, GOV.UK shows the consultation as closed with feedback under analysis, and the current rules described above still apply.

Worked Example: £50,000 on a Contaminated Site

The land remediation relief examples below use HMRC's own £50,000 figure (CIRD60075, CIRD68020). A property investment company buys a former engineering works from an unconnected seller. Its site investigation finds hydrocarbons in the soil from the old process, and its accounting period ends on 31 December 2025.

The company spends £50,000 of capital expenditure on removing and treating the contaminated soil, and no capital allowance is available on it. If the company is profitable and pays the 25% main rate:

• qualifying spend: £50,000
• deduction at 150%: £50,000 × 150% = £75,000
• tax saved: £75,000 × 25% = £18,750
• election deadline: 31 December 2027 (two years after the period end, CIRD60075)

If the company makes a trading loss of £100,000 for the period instead, with no other income:

• qualifying land remediation loss: the lower of £100,000 and £75,000 = £75,000 (CIRD68005)
• maximum credit: £75,000 × 16% = £12,000
• credit claim deadline: 31 December 2027 (one year after the 31 December 2026 filing date, CIRD68030)

Had the same £50,000 been revenue spend, the company would already deduct the first £50,000, so the relief would add £25,000 of extra deduction, worth £25,000 × 25% = £6,250 at the main rate.

Conclusion and the Company Eligibility Check

A land remediation relief claim can be lost to the two-year capital election, and qualifying costs can disappear inside contractor invoices. HM Treasury's summary of responses notes that claims are often considered only after completion, when eligible costs "may be bundled into wider invoices and hard to separate" (June 2026, paragraph 2.9). Before concluding a site has no claim, review the site investigation reports and the contractor schedules for strip-out, groundwork and soil treatment against the land remediation relief conditions above.

Land Remediation Relief is one of several relief families open to a property company, set out in A Map of the Tax Reliefs a UK Limited Company Can Claim. Investors holding mixed-use buildings can also check whether an SDLT refund is due on a mixed-use property, and buyers who used a conveyancer can work through Did Your Conveyancer Overpay Your Stamp Duty? How to Check. To see which reliefs a company's property and spending may support, check what your company can claim.