RLB_UK_Riders_Digest_2013

UK CONSTRUCTION INFORMATION
Tax Savings
Relief is given at 150% for qualifying expenditure, which is available to
UK companies only.
Where clients hold property as an asset, such as a retail portfolio, the
full 150% must be claimed in the year in which the expenditure was
incurred. In cash terms this equates to a 36% saving (assuming 24%
corporation tax) on all expenditure claimed on land remediation relief.
Where clients trade property (e.g. developers), a 50% benefit is realised
as all construction expenditure (100%) is fully written off in any event
to the profit and loss account, therefore enabling the extra over 50%
to be claimed. The extra over 50% relief is only available to claim on
disposal of the property. In cash terms this equates to a 12% saving
(assuming 24% corporation tax) on all expenditure claimed on land
remediation relief.
The only restrictions are that a company is not entitled to claim:
grant funding or,
order to account for the cost of remediation works and stated as
such in the purchase agreement.
Land Remediation/Derelict Land Tax Credit
If a UK company makes a loss for an accounting period in which
they incur expenditure on remediating contaminated or derelict
land, they may elect to receive a payable credit from HMRC. The
amount of tax credit which can be claimed is 16% of the qualifying
LRR for the accounting period the claim relates to. For both
investors and developers, the cash return is equivalent to 24% of the
expenditure incurred (16% x 150%).
Completed developments
Retrospective claims are available on expenditure incurred within two
years from the year end within which the expenditure was incurred.
For example, if a client’s year end is 31 March 2013 any expenditure
incurred after 1 April 2011 can qualify for tax relief, so immediate tax
savings can still be realised.
Planned developments
If this tax relief is factored into the appraisal, project viability can be
improved.
Below are a few examples of the types of works where we have
successfully claimed land remediation relief:
works qualify for land remediation relief, including all associated
works (e.g. prelims, professional fees, prolongation etc.).
The 2009 budget included amendments to the current legislation
which came into effect on 1 April 2009. This tightened the qualifying
criteria for LRR and removed some items from eligibility.
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