The government has revealed further details of its new residential developer tax, as it seeks views on the proposed design features of the tax
The government believes it is right that residential developers, who will benefit from the restoration of confidence in the housing market, should help fund the significant costs associated with the removal of unsafe cladding.
It has now launched a consultation on the design of new residential property developer tax.
Housing secretary Robert Jenrick, said: “We’re making the biggest improvements to building safety standards in a generation, investing over £5bn helping to protect leaseholders from the cost of replacing unsafe cladding on their homes and ensuring industry is held to account for the wrongs of the past.
“This tax will strike the right balance between developers making a contribution and ensuring fairness for the taxpayer.”
‘Right to seek a fair contribution from the largest developers’
Financial secretary to the Treasury, Jesse Norman, commented: “Ending the use of unsafe cladding is a priority for the government, as it builds back better from the pandemic.
“Given the significant costs associated with the removal of unsafe cladding, it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.
“The government wants to ensure this tax is proportionate and works as intended, which is why it is launching this consultation today.”
The government is calling for views on proposed design features of the tax including proposals that:
- It would apply to a measure of developers’ profit from UK residential development
- It would only apply to in-scope profits over £25m
- It would apply to conversion of existing buildings as well as new construction
Ministers intend to set out the rate of the developer tax at a future fiscal event. The time-limited tax is due to apply from 2022 and is intended to raise at least £2bn over a decade.
The new tax will be UK-wide, reflecting the benefit that housing developers will derive from restoring confidence to the housing market across the UK.
The residential property developer tax and a new Gateway 2 levy will be applied when developers seek permission to develop certain high-rise buildings in England.