Land Remediation Relief consultation

Background

Land Remediation Relief (LRR) allows companies to claim an enhanced Corporation Tax deduction of 150% on remediation expenditure incurred for the purposes of a trade or UK property business.

The relief, introduced in 2001, is aimed at incentivising the regeneration of brownfield land and thereby reduce the pressure to develop greenfield sites. LRR has two elements: 

• Contaminated land.
  • Expenditure may be eligible for relief where it is for preventing, minimising, remedying or mitigating the effects of any relevant harm caused by the land being in a contaminated state. The contamination must be present as a result of industrial activity.
• Derelict land.
  • Land is derelict if it cannot be put into a productive state without the removal of buildings or other structures. It must have been continuously derelict since 1 April 1998 to qualify.

There are various restrictions on relief, for example, where the expenditure is subsidised, or where the company (or other party with an interest in the land) is responsible for causing the dereliction or contamination.

According to HMRC statistics, in the latest financial year for which data is available, 1,750 LRR claims were made for a total value of £50 million.

• The median claim was £1,700.
• 90% of claims were below £35,000.
• Over the past five years, the number of claims for LRR has remained consistent, while the value of those claims has been gradually increasing.

Consultation 

HM Treasury states that there are concerns that aspects of LRR hinder it from driving development of derelict and contaminated land. These include:

• The design of the relief, including:
  • The activities that qualify for the relief. 
  • Eligibility restrictions.
  • The mechanism of support; it has been suggested that an above-the-line credit would be more likely to be factored into companies’ decision-making. 
• The impact of the relief, including the value of the relief compared with overall development costs

There are also concerns about the relief’s robustness against error and abuse.

The consultation aims to gain a better understanding of:  

• The impact of LRR on development of brownfield sites. 
• How LRR is factored into businesses’ decision-making. 
• How effective LRR is, and if it is not, why not?
• The extent to which LRR is robust against abuse.

HM Treasury are also interested in how businesses approach development and brownfield land, and how LRR compares and interacts with other incentives for development of brownfield land, such as grants.

The consultation closes on 15 September 2025. Responses can be made via 'SmartSurvey', or email.

Useful guides on this topic

Land Remediation Relief (LRR)
What is Land Remediation Relief (LRR)? Who can claim LRR and what are the conditions? What happens if LRR creates or enhances a loss? 

External link

HM Treasury: Consultation on Land Remediation Relief

Question 1: What are the main factors that businesses consider when selecting a site for development?

• What role does tax (in particular LRR) play?
• If LRR is factored into decision making, how is it considered in the site selection and development process?
• How do businesses establish the amount of contamination or dereliction and, with that, the costs that would be eligible for LRR compared with overall costs on site? How does LRR help with any uncertainty around this?

Question 2: What are the main barriers to development on i) Brownfield sites, and ii) In particular, contaminated and long-term derelict land? To what extent/how does LRR help with these versus other options, such as grants?

Chapter 2: Design of the relief

Question 3: To what extent are the right projects able to access LRR, given the structure and design of the relief?

Question 4: We have heard representations that the following aspects of the design of LRR act as an impediment to incentivising development of contaminated or derelict land, which we are seeking views on in particular:

1. Activities/elements that aren’t covered by LRR.
2. The types of works that are included in the definition of ‘derelict land’.
3. The impact of the date from which land must be derelict to be considered eligible.
4. The number of additional sites that would become viable if the date were changed from 1998 to a fixed date (for instance, 10 years) prior to today, aligning with the original legislation.
5. The ’continuous use' requirement, which disqualifies land from LRR that has been in productive use for more than 7 days a year.
6. The exception from LRR where a company or connected party was responsible in any way for causing the contamination or dereliction or such a company holds an interest in the land (the ‘polluter pays principle’) – in particular where the owner retains a reversionary interest.

Question 5: Are there other aspects of the design that act as an impediment to incentivising the development of contaminated or derelict land?

Question 6: How complex is the relief to claim? To what extent does administrative complexity of claiming the relief hinder the relief from achieving its objectives?

Question 7: To what extent does the legislative complexity of the relief hinder it from achieving its objectives?

Chapter 3: Impact of the relief

Question 8: What role does the credit element of LRR play in influencing decisions in site selection/proceeding remediation works?

Question 9: In general, what proportion of overall costs tend to be eligible for LRR?

Question 10: How much eligible land is there? How does this compare to when the relief was first introduced?

Question 11: Are there examples of contaminated and derelict land that has been developed as a result of LRR? Do you have a sense of how much contaminated or derelict land has been developed overall as a result of LRR?

Question 12: Are there examples of where LRR has contributed to projects that would not have proceeded absent the relief? Similarly, are there examples of where LRR has contributed to projects that would have proceeded absent the relief?

Question 13: How does LRR compare with other forms of support for the development of Brownfield land, such as the Brownfield Infrastructure and Land Fund, and local government support? What benefits or drawbacks would, for example, a grant have compared with a tax relief to the same value?

Question 14: What impacts do interactions between LRR and other forms of support, such as government grants, have?

Chapter 4: Robustness against abuse and error

Question 15: What is your understanding of why customers and/or their agents may make errors when submitting claims for LLR or the LLR tax credit?

Question 16: Are there any changes that could be made to the LRR guidance or rules to help prevent errors when making LRR claims, and/or make the process more straightforward?

Question 17: Are there fraud risks associated with LRR, particularly with the payable tax credit part of the relief?

Question 18: What additional processes could help to reduce error or fraud without introducing disproportionate administrative burdens?