Recent Property Tax Consultations

HMRC and HM Treasury launched consultations on Capital Allowances and Land Remediation Tax Relief on 13 July 2026.  Both of these consultations closed recently, on 21 September 2026.

E³ Consulting responded to both of these consultations, providing representations from both our advisory services and specialist property tax surveying knowledge, as well as feeding in commentary from our clients and their views on certain subjects.

The government sought views and gathered information on potential areas of uncertainty in order to provide greater clarity to businesses in the wake of recent litigation.  Namely the Ørsted West of Duddon Sands (UK) Limited and others v Commissioners for HMRC [2026] UKSC 12 (formerly known as the Gunfleet Sands) case.

The objective of the consultation was stated as to understand more about: the predevelopment costs incurred when undertaking investment projects; stakeholder understanding of the tax treatment of those costs under existing legislation; and the impact of whether predevelopment costs are deductible or not for tax purposes on investment decisions, and on wider government goals, such as growth.

OVERALL OBSERVATIONS – RECKLESS FOLLY

The consultation document in the Ministerial Foreword states “The tax system is an important part of that for investors, not just rates, but also the system’s simplicity and predictability.”  And yet HMRC decided to appeal the Court of Appeal decision Gunfleet Sands v HMRC [2025] EWCA Civ 279 that the vast majority of the tax sector considered right and just, creating this conundrum about where to draw the line between eligible and ineligible costs that benefit from capital allowances relief.  Creating complexity and uncertainty!

In our view these issues only relate to large complex infrastructure projects – such as power stations, windfarms, ports/airports, data centre and other such large scale investments.  Importantly many, if not all, of these projects contribute massively to impact the UK economy in terms of facilitation or underpinning growth and transition to clean and resilient energy generation and costs faced by industry and consumers.  Accordingly, any action by HM Treasury (HMT) and/or HM Revenue and Customs (HMRC) that adds expense as a result of the Supreme Court decision in Ørsted West of Duddon Sands (UK) Ltd and others v HMRC [2026] UKSC 12 is contrary to the Governments stated aims and ambitions.  Pushing up prices, creating uncertainty and discouraging investment into these complex projects and UK based businesses and facilities.  Many of the entities involved in these ‘major infrastructure’ projects are global entities and have a real choice of where they choose to do business.  Interestingly, Ørsted sold a significant stake in these windfarms shortly after the Court of Appeal decision.

Leaving significant project costs excluded from being valid business expenses (so tax deductible) or determined as ineligible for capital allowances relief simply increases the costs to deliver these assets.  In turn the energy (as with Gunfleet/West of Duddon Sands) to the users/consumers is more expensive than it could be – adding to the already significant cost burdens businesses and families face.

We have very grave concerns that different government departments are pursuing separate strategies without coordination or oversight to fulfil broader Government ambitions or policy choices.  Without proper coordination and policy synergies being managed by the Government such court decisions risk significant and negative impact on the UK economy and households.

HM Treasury sought input from the UK property and construction sectors on reforming Land Remediation Tax Relief (LRTR) in a new consultation.

The consultation sought to explore the viability and effectiveness of some proposed reform options - both collectively and in isolation.

HM Treasury asked a range of questions about how well the options might address the identified shortcomings, possible issues with the proposed approaches, implications for different types of businesses and developers, and details of technical implementation such as scope and eligibility criteria.

The government believes this reform would simplify the process of claiming LRTR and allow developers to claim LRTR on an Expanded List of Eligible Contaminants, with the Local Authorities continuing to determine what remediation activity needs to take place through the existing planning processes...

OVERALL OBSERVATIONS – ADDRESSING THE REAL ISSUES

The consultation document in the Ministerial Foreword states “Brownfield sites can play an important role in meeting the country’s housing and economic needs.  They can support regeneration, make better use of land in existing towns and cities, and help reduce pressure on greenfield sites.  However, the government recognises that bringing contaminated or derelict land back into productive use can be complex, costly and uncertain…Land Remediation Relief was introduced to support the remediation of contaminated and derelict land.  The government has reviewed the relief and concluded that, while it provides meaningful benefit in some cases, it is not fully achieving its objective of incentivising the remediation and redevelopment of brownfield land.”   

Policy intent and outcomes are two separate matters but ultimately achieved through the legislation in place and how that is enforced by HM Revenue and Customs (HMRC) in ‘policing’ the tax relief available.  We note that the Government will only proceed with the suggested reforms - if they are confident that they will present meaningful, cost-effective support for brownfield remediation and development.  We would urge Government to consider LRTR in a wider context of the regeneration and opportunities for growth and prosperity that follow on from the projects that might benefit from LRTR now or in the future – that could accelerate housing delivery, boost employment and associated economic activity, reducing anxiety and supporting positively mental health factors within communities that might previously have been blighted by redundancy of legacy industries such as mining, ship building or steel production and automotive manufacture.

Government tends to view some of these aspects in too much isolation – seeking to have certainty of cost, without factoring in these wider socio-economic factors that also bring ‘dividends’ to education, housing and health too.  Reducing complexity and uncertainty in tax relief will help deliver regeneration – not only of the physical assets, but the whole community – at every level.

In our view the structure of LRTR into two distinct elements – contaminated land and derelict land has hindered the effective delivery of complex projects.  In particular, we have had many situations that have sought LRTR on derelict sites but ultimately failed to present an unbroken chain of ownership and evidence of disuse – proving a negative – back to April 1998.  This has meant that we have not put forward claims under the dereliction basis, despite this being a significant barrier to regeneration of the relevant land/properties.  In conjunction with others, we are aware that the number of successful claims under the dereliction element are significantly lower than for contamination and tend to be in distinct geographic areas that have had significant stagnation.

BETTER DATA

In general, we consider the Government should publish much more data to help illustrate the different tax reliefs and how they operate.  Whilst clearly the data should be anonymised to protect taxpayers, it should be possible to publish annually data that shows the number of tax claims and approx. values – minimum, maximum, mean and – if not too revealing of the individual sites/project and thus taxpayers – by region.

Timing of relief is a crucial factor as this can vary significantly between sectors and the nature of the project.  In house building, there can be significant time lags between incurring remediation costs and the point at which relief is available on the ultimate sale of the houses.  Equally for commercial developers the duration of larger sites can impact the latter constructed buildings etc. on a project that may span many years.

LOCAL PLANNING AUTHORITIES

We are extremely concerned that the proposal to link the scope of LRTR to pre-commencement planning conditions to allegedly simplify and streamline the process of claiming tax relief; that we consider could significantly complicate matters and may prove unworkable.  We are also mindful of the resource constraints and much expanded remit of Local Planning Authorities (LPAs) and their acknowledged working pressures to accommodate the new National Planning Policy Framework (NPPF) that has restructured the rules-based approach to planning, development, and decision-making, alongside Biodiversity Net Gain (BNG), CIL and the imminent introduction of the Building Safety Levy (BSL), amongst others!

An expanded list of eligible contaminants, as referenced in para 1.8, can be achieved far more simply by refining the existing LRTR legislation to better include or define the costs that are acceptable for relief.  The derelict land included discrete works and expending such a list will better provide certainty than rely on LPAs to ‘sign off’ contamination works.

We also highlight Government’s ambition to accelerate housing growth to achieve 1.5m houses within the parliament.  We cannot see that this linkage with LPAs will help to accelerate planning outcomes and thus development delivery.  It may also add complexity because the existing definition of contaminated land in CTA 2009, Part 14 is already different from the planning and environmental definitions and legislation.

The consultation advises that Government intends remediation resulting from the presence of water and air to remain excluded from LRTR and it clear references at para 1.1 that “The contamination must be present as a result of industrial activity”.  This exclusion remains ambiguous and requires statutory clarification as to ensure former mining activity (not just coal, but any extraction activities of different minerals and materials – or ‘industrial activity’) that has blighted sites across the UK could and should be addressed to support regeneration of these complex sites, hindered by the myopic approach of the current legislation.

If you would like to discuss any property tax matters or specific queries relating to the above information, then please do contact the team on 0345 230 6450 or [email protected]. We look forward to speaking with you soon.