The introduction of a Residential Property Developer Tax (RPDT), has now been confirmed. The legislation implementing the RPDT was published on 4 November 2021 and it will come into effect from 1 April 2022. We’ve answered some of the common questions developers have around the new tax. 

What does RPDT apply to and what rate of tax is payable?

RPDT will be charged (as if it were an amount of corporation tax) on profits arising from residential property development (RPD) at a rate of 4% on profits exceeding £25 million per year.

Who does RPDT apply to?

The tax applies to residential property developers (RP developers). For the purposes of RPDT, a company is deemed to be an RP developer if:

  • the company undertakes RPD activities;
  • or the company (or a member of its group) has a substantial interest in a relevant joint venture company.

What activities are treated as RPD activities?

A company will undertake RPD activities if it does anything on or in connection with land in the UK in which the developer has, or has had, an interest for the purposes of, or in connection with, the development of residential property. Typical RPD activities include:

  •  seeking planning permission;
  • marketing; 
  • managing residential property; and
  • dealing in, or constructing, residential property.

Can a land promoter or “site-flipper” be subject to RPDT?

Yes, this is possible where the company holds, or has held, an interest in the relevant land. 

An RP developer (or a related company) will have an interest in land if the developer (or related company) has an estate, interest, right or power in or over the land, or the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over the land (other than an excluded interest). This interest must form part of the RP developer’s (or the related company’s) trading stock of a trade which includes the carrying on of activities for the purposes of, or in connection with, the development of residential property.  

It should be noted that certain interests in land are excluded interests for the purposes of RPDT – these are: (a) any interest or right held for securing the payment of money or the performance of any other obligation; and (b) a licence to use or occupy land.

The requirement to have an interest in land should mean that profits from similar activities by companies acting as third-party contractors who are not RP developers or ‘pure promoters’ will not be caught by RPDT. 

Can a company be subject to RPDT if it no longer has an interest in the land at the time the RPD activities are carried out?

Yes, it can if the RPD activities:

  • are designing, seeking planning permission in relation to, constructing or adapting the residential property (or any activities which are ancillary to those activities; 
  • were planned or anticipated at the time the company ceased to have the interest in the land; and
  • are not carried on solely in connection with areas of the land that do not constitute residential property.  

Is any housing excluded from RPDT?

Yes. The draft legislation sets out a number of exclusions from RPDT including:

  • homes or other institutions providing residential accommodation for children;
  • student accommodation;
  • homes or institutions providing residential accommodation with personal care for groups in need of personal care e.g. because of old age or disability or past or present dependency on alcohol or drugs; and
  • residential accommodation for members of the armed forces, emergency services or hospital workers.

The draft legislation also provides that non-profit housing companies will not be considered RP developers – this means that social housing providers and social landlords will fall outside the scope of the tax together with their trading subsidiaries. The build-to-rent sector will also be excluded from the tax, as implied by the ‘trading stock’ requirement for an interest in land, although the government intends to keep the decision under review. Likewise, profits arising from RPD activities carried out on land held for investment purposes will fall outside the scope of RPDT.

Are there any anti-avoidance measures in the draft legislation?

Where an RP developer has an accounting period beginning before 1 April 2022 and ending on or after this date, a rule is provided for this “straddling period”. Accounting periods falling before 1 April 2022 will be treated as a separate period to those falling after, so profits treated as arising on (and after) this date will be subject to the RPDT provisions. The legislation contains anti-forestalling provisions to prevent an RP developer attempting to accelerate profits so that they arise in an accounting period ending before 1 April 2022.

Contributors: Chloe Jodkowski and Laura Allum

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Date published

12 November 2021


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