Asbestos Tax Relief: Are You or Your Clients Missing Out?
Are you or your clients paying for asbestos work? If the answer is yes and this work is in buildings or on land then you could be eligible for sizeable tax relief.
As part of the governments commitment to urban regeneration it introduced 150% tax relief for businesses incurring expenditure on land remediation (This includes asbestos).
What is land remediation & why does that include asbestos removal or remediation?
Land remediation in short is the betterment of land from harmful contaminants. Under the land remediation relief order this includes any building or structure on that land. This in turn specifically includes asbestos either on or under the land and within structures or buildings on that land.
What does 150% tax relief mean?
The costs of asbestos removal or remediation can be set against the company’s taxable profits. For example if £50’000 is spent on removing or making asbestos safe the £75000 can be knocked off taxable profit.
Is there any requirements for a business to make a claim?
1) The company must not have been the original polluter of the land or buildings. The asbestos must have been already present when the land and or buildings were purchased.
2) The business must be a UK registered company
3) The company must not receive any other form of subsidy or grant towards the asbestos removal or remediation.
Can I claim for more than just the asbestos removal or remediation work?
The costs allowable also include ‘add on’ costs. These can be the professional fees, preliminary fees, landfill tax, surveys and anything similarly related to the project. The costs of replacement materials (refurbishment) may also be allowed in certain circumstances. The extent will depend on the nature of the development. These add ons can increase the claim by up to 50% of the actual asbestos removal or remediation works.
How do I make a claim?
Tax relief is claimed via the tax return. The relief is very generous, but claims must be properly made to ensure they meet HMRC requirements. It is important that you work with asbestos contractors that understand the type and layout of information HMRC will require. As a minimum HMRC will require:
- Details of all expenditure including detailed invoices
- Full details of labour and material costs
- Confirmation that the land or building was acquired in a polluted state
- Copies of surveys and environmental reports
- Asbestos validation reports and methodology of the removal or remediation
How does the system work in theory?
Based on a building constructed prior to the year 2000. Purchased by an investor which requires refurbishment including the removal of asbestos.
- Cost of asbestos survey £10,000
- Asbestos contractor £55,000
- Air Monitoring £5,000
- Professional Fees £5000
- Preliminaries £5,000
- Replacement Materials £70,000
- TOTAL REMEDIATION EXPENDITURE £150,000
- TAX RELIEF AVAILABLE £225’000 (150,000 x 150%)
How does the system work in practice?
The government website contains some information and guidance. The scheme has many variables which must be considered. However a recent client who owned a building which required asbestos removal works asked for our help to make a claim under the scheme. The total asbestos removal cost was £520,000. Once we had supplied everything that HMRC required our client was able to offset £300,000 against their total project cost.
How do I know if this scheme is relevant to me and what do I do next?
We have helped many clients successfully claim through this scheme. If you would like some advice and want to talk through the next steps for you or one of your clients then feel free to contact Oracle Asbestos Solutions.