CIRD60080 - Remediation of contaminated land: tax credit: qualifying land remediation loss

A company has a qualifying land remediation loss for an accounting period if, in that period, it

• carries on a trade or Schedule A business, and
• incurs qualifying land remediation expenditure (see CIRD60145 for definition) that is allowed as a deduction in computing the taxable profit, or allowable loss, of its trade or Schedule A business, and
• is entitled to land remediation relief, and
• incurs a loss in that trade or Schedule A business.

(FA01/SCH22/PARA13 and FA01/SCH22/PARA14).

Amount of qualifying land remediation loss

The amount of the qualifying land remediation loss for an accounting period is the lesser of:

• the amount of the company's unrelieved trading loss or Schedule A loss for that period, and
• 150% of the qualifying land remediation expenditure for that period.

(FA01/SCH22/PARA14 (3)).

Unrelieved loss

The unrelieved trading loss, or Schedule A loss, of a company is the amount of the loss for that accounting period reduced by:

• the amount of any claim that could be made, whether or not actually made, to set the loss against other profits of the same accounting period (ICTA88/S392A (1) and ICTA88/S393A (1)(a)), and
• any other relief claimed by the company in respect of the loss for that accounting period, e.g. losses set off against profits of an earlier accounting period (ICTA88/S393A (1)(b)) and losses surrendered to group or consortium members (ICTA88/S403 (1)).

(FA01/SCH22/PARA14 (4)).

For these purposes you ignore any trading losses, or Schedule A losses, brought forward from an earlier accounting period (ICTA88/S392A (2) and ICTA88/S393 (1)), or any trading losses carried back from a later accounting period, (ICTA88/S393A (1)(b)), (FA01/SCH22/PARA14 (5)).

Example

Company A is carrying on a trade and incurs qualifying land remediation expenditure of £50,000 in an accounting period. The expenditure is an allowable deduction in computing its Case I loss for CT purposes. In addition the company claims land remediation relief of £25,000 in respect of the expenditure (see CIRD60015). After taking other expenses into account, the company has an overall trading loss for the accounting period of £80,000. The company has other income of £10,000 in the accounting period.

The company makes a claim to surrender the full amount of its qualifying land remediation loss in exchange for a payment of land remediation tax credit, but makes no other loss relief or group relief claims for the period:

• 150% of the qualifying land remediation expenditure is £75,000 (£50,000 x 150%).
• The company's unrelieved trading loss for the accounting period is £70,000 (£80,000 less £10,000).
• The company's qualifying land remediation loss is the lesser of these two amounts, i.e. £70,000.

The tax credit payable is £11,200 (£70,000 x 16% - see CIRD60090). The trading loss the company is able to carry forward to future accounting periods is £10,000 (£80,000 less £70,000) - see CIRD60085).