Did you know that you could claim tax relief on the costs of removing asbestos from business premises? Not only that, you could actually receive a grant of an additional 50% of your costs as well as having the full cost reimbursed. That is, 150% of your costs are paid to you in total.
It’s part of what HMRC refers to as ‘Corporate Intangibles Research and Development’ which applies to ‘land remediation relief’ for work on land in a contaminated state.
The definition of land specifically includes any buildings on the land and asbestos is included as one of the relevant contaminants.
How does it work?
The scheme provides relief from corporation tax. But you can benefit regardless of whether or not there is any corporation tax due (provided that your business is a corporation tax payer i.e. not a sole trader). If your business is generating enough profit to have a tax bill large enough then it’s a straightforward reduction in your corporation tax bill. In other circumstances, such as a loss-making business, you can be provided with a tax credit in the form of a ‘cash payment’.
With asbestos removal costs typically being in the tens of thousands of pounds and in some cases hundreds of thousands, this is a significant financial benefit.
What costs can be included?
It can include asbestos survey costs as well as the actual asbestos removal. The wording refers to ‘the cost of establishing the level of contamination’ being eligible. Quite reasonably though, this only applies if it is followed by asbestos removal or remediation.
Because ‘professional fees’ are specifically included as eligible costs, we believe that this covers asbestos surveys and project management of asbestos removal works. Also, specifically included are staffing costs, clearing the site, and related costs such as security.
The costs must be allocated to this tax relief scheme within two years of the accounting period to which they apply. But there appears to be a different time period applicable to the additional 50% ‘The 50% additional relief is given in the same period as the actual expenditure is charged to the profit and loss account.’ On the positive side, it is very straightforward to claim: ‘A computation reflecting the claim and submitted in time is sufficient.’
What are the eligibility criteria?
The following criteria are used to determine eligibility:
- The asbestos materials must be from a ‘third party contaminated site’. In other words, it applies if you have bought land or a building from someone else which contained asbestos when you bought it. It does not apply if you were the one who contaminated the site. For example, if you commissioned building work that used asbestos containing materials then you cannot claim the relief, but anyone to whom you sell the property may be able to.
- Asbestos is present from an industrial activity (refurbishment for work purposes or building for industrial use should count).
- It is causing relevant harm or there is a serious possibility that it could cause relevant harm. We believe that asbestos that needs to be removed is certainly causing relevant harm or has the definite potential to do so. The harm comes from the risk of or actual inhalation of asbestos fibres. Because remediation work can be funded as well as removal, the funding should cover all scenarios in which asbestos is being managed.
- Potential damage to buildings and the impact on their use is an alternative qualifying factor. The deterioration of asbestos containing materials such as asbestos cement that can fall onto other surfaces could meet this criterion.
- You have to complete either removal or remediation.
Why is the government doing this?
We would suggest that the advantages are threefold:
- Remove the disincentive that buyers of commercial property would otherwise have to do asbestos removal work. Getting it removed is in many cases better for the users of the building. The best time to do it is before refurbishment.
- Remove what may otherwise be a barrier to the operation of the commercial property sector. Want to buy a property that contains asbestos? Maybe not, except for this incentive.
- Incentivise the development of brownfield sites. Whilst this may have some additional upfront costs, it is a more efficient use of space overall.
What should you do?
Basically, don’t avoid asbestos removal or remediation. There will be upfront costs, but the advantages from the financial incentive (should you qualify for this) plus the compliance, the peace of mind, and bringing new areas of a building into use seem compelling.
We’d welcome any enquiries about the funding or your needs in relation to any asbestos survey, sampling, and project management for asbestos removal/remediation. We’ll always respond with open and helpful advice. Feel free to get in touch.