This is a freeview 'At a glance' guide to Flood and Coastal Erosion Risk Management project relief.

Provisions introduced in 2015 allow businesses to receive tax relief for expenses incurred on contributions made to Flood and Coastal Erosion Risk Management (FCERM) projects.

  • The measures apply to expenses incurred on or after 1 January 2015 which would otherwise not be deductible.
  • The idea is to encourage private sector involvement in schemes to prevent flooding.

Where the conditions are met contributions to an FCERM are deductible for Income Tax or Corporation Tax purposes.

  • Relief applies to all types of trades and property businesses, whether incorporated or not.
  • Relief is claimed through the tax computations and Self Assessment returns.


Tax relief is given to a person (the contributor) who incurs expenses in making contributions to a qualifying FCERM project where these expenses would not otherwise be tax-deductible.

Contribution means a sum of money paid or any services provided in the accounting period.

Qualifying projects

A Flood or Coastal Erosion Risk Management project is a qualifying project if:

  • An English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project.
  • The Environment Agency has determined that it will carry out the project.
  • The Environment Agency has allocated funding by way of grant-in-aid to the project.

A contribution to an FCERM project is a qualifying contribution if the contribution is made for the purposes of the project and under an agreement between:

  • The person making the contribution.
  • The applicant authority or the Environment Agency.
  • Between the two persons and other persons.

Anti-avoidance: Disqualifying benefits

No tax relief is given if the contributor or a connected person receives, or is entitled to receive a 'disqualifying benefit'.

  • A disqualifying benefit is any benefit but excluding a refund or compensation (these are dealt with below) and any structure, land or plant and machinery used for the project.

Refunds and compensation

If a contribution is made to an FCERM and the contributor or a connected party receives a cash refund or, in the case of a contribution by way of a provision of services, receives compensation in money or money’s worth:

  • The amount of the refund or value of the compensation is taxed as a trading receipt.
  • If the business has ceased trading it will be taxed as a post-cessation receipt.

Small print

This tax relief is similar to the relief in section 82 ITTOIA 2005 and section 82 CTA 2009 “Contributions to local enterprise organisation or urban regeneration companies”.

Income Tax

Sections 86A and 86B ITTOIA 2005 with a reference to those sections in section 272 (application of trading income rules to property business).

Corporation Tax

Sections 86A and 86B CTA 2009 (trading income), Sections 1244A and 1253A (companies with investment business) and adjustment to table in section 210 (application of trading income rules to property business).

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