2 Mins
For accounting periods ending on or after 1 April 2022, companies that are residential property developers are subject to a residential property developer tax (“RPDT”). This is currently set at 4% of residential property developer profits for an accounting period that exceeds the annual allowance of £25,000,000. This allowance is shared between the group members and can be allocated using an allowance allocation statement.
Residential property definition
The residential property definition for RDPT includes:
- a building or part of a building that is designed or adapted, or is in the process of being constructed or adapted, for use as a dwelling
- land that is or forms part of the garden or grounds of a building or part within paragraph (1) (including any building or structure on such land)
- an interest in or right over land that subsists for the benefit of a building or part within paragraph (1) or of land within paragraph (2), or
- land in respect of which planning permission is being sought or has been granted so that it, or a building or part of a building on, interest in or right over it, will fall within any of paragraphs (1) to (3).
There are also some specific exclusions (e.g., temporary sheltered accommodation, student accommodation) and would need to be considered in each case.
Application of RPDT to UK companies
A non-profit housing company is not classed as a residential property developer, however, it needs to be one of the following:
- A non-profit registered provider of social housing
- A registered social landlord under Part 1 of the House Act 1996 (registered social landlords in Wales)
- A registered social landlord under the Part of the House (Scotland) Act 2010
- A registered house association under Chapter 2, Part 2 of the Housing (Northern Ireland) Order 1992
- A wholly owned subsidiary of one of the above
There are special rules for joint ventures, and these would need to be considered in addition to the above.