Residential property developer tax – an update

In February 2021 the then Secretary of State for the Ministry for Housing Communities and Local Government (temporarily the Department for Levelling Up Housing and Communities) announced the introduction of a building safety package.

This package included the residential property developer tax (RPDT) introduced with the aim of raising funds to help finance the government’s spending on the rectification of defective cladding following the Grenfell Tower tragedy in June 2017. 

RPDT is charged in addition to corporation tax (CT) at the rate of 4% on an annual allowance of £25m. As at 31 March 2024 the total amount raised since its introduction on 1 April 2022 was £260m (tinyurl.com/5n76nxwp).

A corporate is subject to RPDT if it satisfies the following four gateway tests:

1) it is liable to UK CT – thus sole traders partnerships (whose members don’t include...