LAND REMEDIATION RELIEF FOR JAPANESE KNOTWEED

Land Remediation Relief for Japanese knotweed is a tax incentive designed to encourage the redevelopment of land that may be contaminated. 

The scheme allows companies in the UK to claim a tax deduction for the costs of clearing land contaminated with pollutants, including Japanese knotweed (Fallopia japonica) – an invasive plant that causes damage to ecosystems, infrastructure, and properties.

To learn more about Land Remediation Relief for Japanese knotweed, what type of work qualifies, and how to make a claim with HMRC, continue reading.

What Does Land Remediation Relief Cover?

Land Remediation Relief (LRR) is a UK Corporation Tax relief scheme that covers the costs of cleaning land and property that may be contaminated or left derelict. 

It was first introduced as part of the Finance Act 2001 to encourage the redevelopment of land, but has since been extended to cover a wider range of contaminants and organisms, such as: 

• Japanese knotweed 
• Asbestos 
• Radon 
• Arsenic 
• Contaminated soil or underground water 
• Redundant property foundations

These contaminants are recognised by HMRC for potential risk to human health and the surrounding environment. For instance, the structural damage caused by Japanese knotweed, or the toxic fibres released by asbestos, could make land or property incredibly harmful and unusable. 

Does Japanese Knotweed Qualify for Land Remediation Relief?

As we know, LRR was originally established in 2001. However, it was later broadened a few years later under the Corporation Tax (Land Remediation Relief) Order 2009 to recognise Japanese knotweed as a harmful contaminant in the UK.

Japanese knotweed typically will qualify for LRR if it meets strict conditions set by HMRC: 

• The scheme is only available for UK-registered companies that pay Corporation Tax
• Your company must have a major interest in the land or property contaminated by Japanese knotweed, with an interest in a long-term lease (usually at least 7 years)
• The land or property must have been acquired for trade or business purposes only
• Your company must not have been responsible for the contamination of Japanese knotweed
• The contamination of Japanese knotweed on your land or property must satisfy a ‘harm’ test

Unfortunately, Japanese knotweed won’t qualify for LRR if:

• You’re a sole trader or a partnership.
• You don’t meet the ownership test, meaning you have no interest in a long-term lease for the land or property
• The land or property hasn’t been acquired for trade or business purposes
• Your company caused the contamination of Japanese knotweed (meaning you’re the polluter)
• The contamination of Japanese knotweed on your land or property doesn’t satisfy a ‘harm’ test
• The remediation to remove the Japanese knotweed contamination was paid for by external funding, such as a Government grant
• You knew about the contamination but didn’t take any action, and let it spread
• You took the knotweed-contaminated soil to a landfill site rather than letting it be treated in situ or at an off-site treatment centre

What Japanese Knotweed Work Does Land Remediation Relief Cover?

LRR typically covers the following Japanese knotweed removal and treatment work:

• Surveys/Assessments – Environmental surveys and management plans made before treatment, such as a Knotweed Management Plan (KMP) 
• Treatment – Professional treatment, which usually includes labour costs and revisits 
• Removal – The act of removing the Japanese knotweed, including any contaminated soil or materials 
• Disposal – Disposal of the contamination, including transportation costs 
• Monitoring – Any post-treatments required after the full removal of the contamination to ensure remediation has been successful
• Wages – Costs to pay employees for work related only to the removal of the Japanese knotweed

How to Claim Land Remediation Relief for Japanese Knotweed

If your UK-registered company wants to make an LRR claim for Japanese knotweed, there is no specific or separate application – the process is completed as part of your Company Tax return.

1. Check if your company is 100% eligible to make an LRR claim for Japanese knotweed
2. Identify all the qualifying remediation costs
3. Gather evidence to support your claim, such as a Knotweed Management Plan (KMP)
4. Submit your claim within your company’s Corporation Tax Return (CT600)
5. Wait for HMRC to confirm the claim’s outcome (time varies)

If your company’s claim is denied, you have the right to challenge it with HMRC through a formal process by requesting a statutory review. You may be required to submit more evidence to support your claim further. 

How Much Can You Claim?

You can claim 150% tax deduction on qualifying expenditure related to Japanese knotweed, meaning that for every £100 you spend on eligible remediation work, £150 will be deducted from your taxable profits.

Let’s take a look at an example.

If your company spends £20,000 on eligible treatment to remove Japanese knotweed, you can deduct £30,000 from your taxable profits, saving £7,500 (assuming the main 25% Corporation Tax rate applies).

Support Claiming Land Remediation Relief for Japanese Knotweed

At LJS Accounting Services, we support businesses across the UK to claim LRR for Japanese knotweed. Our team is highly experienced, helping you potentially secure a 150% Corporation Tax deduction on clean-up costs. We can guide you through the eligibility criteria, remaining on hand to answer any important questions you may have. 

If you require support to make an LRR claim, please contact our professional team.