New Residential Property Developer Tax “likely to be introduced in 2022”

12/05/2021

A new residential property tax could be levied on developers in the wake of the Grenfell Tower tragedy, it has been revealed.

The consultation, published by HM Treasury, suggests that the funds raised will be used to help pay for the removal of unsafe cladding.

According to the report, the new Residential Property Developer Tax will be launched as part of the Government’s “Building Safety Package”.

The levy – which could raise up to £2 billion over 10 years from 2022 – would apply to developers, including stand-alone companies and groups, with annual profits “in excess of £25 million”.

A second tax, known as the Gateway 2 developer levy, will also be applied when developers seek permission to develop certain high-rise buildings in England, the consultation reveals.

While the exact rate of tax has yet to be revealed, HM Treasury says the rate will be “proportionate and considered in the context of the increase in corporation tax to 25 per cent in 2023”.

Introducing the levy, the consultation reads: “The tax is one of the government’s measures to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market.

“The government is consulting on the design of that tax ahead of its inclusion in the 2021-22 Finance Bill.”

To learn more about the Residential Property Developer Tax, find the consultation document here.

For help and advice with related matters, please get in touch with Anne-Maree Dunn or a member of our tax team today.