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Tax rebate set to boost urban regeneration

CHANCELLOR GORDON Brown introduced tax breaks worth £1bn over five years to boost urban regeneration in his Budget last week.

The measures were foreshadowed in the Government's Urban White Paper, launched in November.

The Government wants to see 60% or more of all new development taking place on brownfield land.

A 150% VAT rebate is being introduced to cover the costs of cleaning up contaminated land. The Government hopes this will stimulate a sharp increase in remediation work.

Firms will be paid the tax rebate immediately after site remediation has been carried out - they currently have to wait until the sale of the land is completed.

The Government is to consult on a new tax credit system aimed at encouraging private sector investment in depressed areas.

VAT on converting or refurbishing existing buildings for housing is to be reduced to 5%.

The move reduces but does not remove the difference in cost between refurbishing existing structures and building from scratch on greenfield land.

At the moment, zero VAT is charged on materials used for construction of new dwellings on greenfield sites.

All property transactions in the most disadvantaged parts of the UK will be exempt from stamp duty. A list of affected areas has still to be published.

The Budget also introduced measures to improve the environment.

The standard rate of landfill tax is to be increased from £11/t by £1 a year over the next five years to reduce total waste and encourage recycling.

To stimulate recycling of construction materials and reflect the environmental costs of quarrying, an aggregates tax will be imposed from next month.

The Government is also to introduce a climate change levy, from 1 April. This will penalise companies according to the volume of carbon dioxide they produce. The Government wants to reduce CO 2emissions by 5Mt/year by 2010 in line with targets set under the Kyoto Protocol.

UK businesses, on average, waste 20% of the energy they consume, the Chancellor said.

The levy will also encourage use of renewable energy sources.

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