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HMRC internal manual

Business Income Manual

Waste disposal: site restoration: relief for capital payments

S168 Income Tax (Trading and Other Income) Act 2005, S145 Corporation Tax Act 2009

Any trader who makes a capital ‘site restoration payment’ (see BIM67540) in the course of carrying on a trade is entitled to a deduction in computing the profits of the trade. There is no requirement that the person claiming relief either deposited waste on the site or is carrying on the trade, wholly or partly, of waste disposal. However, there must be a trade being carried on when the payment is made and so if trade has ceased at the time of the payment it cannot be relieved.

The deduction is allowed in computing the profits of the trade for the period in which the payment is made. Therefore no deduction is allowable in respect of a provision for future site restoration payments. Where the payment is made, directly or indirectly, to a connected person, the deduction is not allowed until the period in which the restoration work to which the payment relates is completed.

We do not regard the legislation as applying to sites other than those where waste disposal activities have taken place. For example, the legislation does not apply to sites where contamination has occurred as a result of the ‘on-site’ disposal of industrial, etc. waste unless the disposal was under a waste disposal licence (see BIM67545) or a relevant planning obligation (see BIM67550). Similarly, a local authority may require that contaminated land on a former industrial site be restored as a condition of their giving planning permission for development. However, that requirement is unlikely to be under a relevant planning obligation. The relief for site restoration payments will only apply if there is such an obligation.