Readers’ forum: Residential property developer tax trap

The introduction of the residential property developer tax (RPDT) announced in February 2021 was intended to target only the largest property developers in the UK. It would only apply to companies (or groups) with annual profits exceeding £25m. This message is reiterated in HMRC’s manual at RPTD01100.

The limited online commentary I’ve found echoes that only the biggest players in the industry will be caught. ‘Smaller-scale’ developers with profits below £25m could be forgiven for dismissing RPDT’s relevance [to them] out of hand without checking the detail. This could prove costly.

Reading the legislation it appears that where a company undertaking residential property development is a member of a group unless that group has nominated a member to act as an allocating company the aforementioned developer could find itself with very little allowance available to shelter its in-scope profits resulting...