It is estimated that there are as many as 100,000 contaminated sites across the UK, extending to between 50,000 and 300,000 hectares.
On most property purchases, solicitors will check the likelihood that a property may be affected by contamination via an environmental search and the search provider will often also comment on the risk of any contamination giving rise to enforcement action by the authorities or a claim from a third-party land owner.
It is important to assess the risk because where the polluter cannot be made to remediate land liability will fall on the current owner or occupier. For that reason, a bank will often be unwilling to accept a property as security if it is contaminated due to the affect on saleability and the risk of liability if the bank were to take possession.
Contaminated land can however represent an opportunity for tax planning. Land and property owners, including leaseholders in some circumstances, can claim tax relief against expenditure incurred on removing or treating contaminated land if they were not the polluter. Remediation includes asbestos removal, treatment of Japanese Knotweed and removal of contaminants from the ground (amongst other action).
The generous relief allows an owner to claim a ‘super trading deduction’ of 150% of expenditure on contaminated land where the expenditure would not have been incurred had the land not been acquired in a contaminated state. Costs that can be claimed against include employee costs, materials used for remediation and sub-contracted expenditure.
Both buyers of contaminated land and property owners who have found their property is contaminated through no fault of their own should seek specialist accountancy advice on the availability of this tax relief. A seller of contaminated land should be mindful of the availability of the relief to a buyer in negotiations over price.
For specialist advice on the purchase of commercial or residential property on contaminated land and the associated contaminated land tax relief, contact Farleys’ property solicitors on 0845 287 0939 or by email today.
