Residential Property Developer Tax
The Residential Property Developer Tax (RPDT) was announced by the then Secretary of State for Housing, Communities and Local Government, Robert Jenrick MP, on 10 February 2021.
It is a new 4% tax which will apply from 1 April 2022 to companies or groups of companies undertaking UK residential property development with annual profits in excess of £25 million. It forms part of the government’s Building Safety Package, following the Grenfell Tower fire. Given the significant costs associated with the removal of unsafe cladding, the government believes it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.
A consultation on the design of the new tax was launched on 29 April 2021 and ran until 22 July 2021. A further technical consultation on the draft legislation was launched on 20 September 2021 and ran until 15 October 2021. A response to the consultation was published at the Autumn Budget 2021. Ref https://www.gov.uk/government/consultations/residential-property-developer-tax-consultation
Legislation will be introduced in the Finance Bill 2021-22 to establish the tax. The computation of profit will start from the same basis as for Corporation Tax before an adjustment is made to identify only the profits that relate to the residential property development activity.
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