In his Autumn Statement on 3 December the Chancellor, George Osborne included a new measure that will entitle tax relief for businesses contributing towards flood defence schemes from 1 January 2015.
The proposed measure will ensure that contributions by a business of money or services towards a Flood and Coastal Erosion Risk Management (FCERM) project, which has been allocated grant-in-aid funding by the Environment Agency, will be deductible from the profits of the business for corporation tax or income tax purposes.
The Government’s policy on financing flood defence projects, known as Partnership Funding, means that the Government may contribute grant-in-aid towards the costs of a flood defence scheme in proportion to the nationally deemed benefits based on the numbers of households protected, the damages being prevented, and certain environmental outcomes. If the costs of the FCERM project are greater than the grant-in-aid contribution available, then the remainder of the funds needed can be sought locally from local authorities, IDBs and the wider community; including businesses.
This new measure provides an incentive to encourage greater private sector participation in FCERM projects. To date most contributions to Partnership Funding schemes have been made by large businesses and this trend is expected by the Government to continue. Relief will be claimed through the tax computations and returns, and businesses will have calculated the relevant details as part of making their contribution to a scheme.
Further information can be found on the Gov.uk website in an HMRC Policy Paper.