Property developers face new tax

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A new residential property developer tax is being proposed by the Government.

Likely to be introduced in 2022, it forms part of a £5bn cladding remediation package following the Grenfell Tower disaster and is projected to raise at least £2bn over the next 10 years.

As proposed, it will apply to developers with annual profits in excess of £25m and will help pay for the removal of unsafe cladding on high-rise residential buildings. There is also to be a new Gateway 2 developer levy, which will be applied when developers seek permission to develop certain high-rise buildings in England.

The Government said it proposes to adopt a wide definition of ‘property development’, including all stages from land acquisition to marketing of finished developments.

Consultation on the proposed new tax, which is open until 22 July, sets out two alternative models for recognising the profits subject to tax. Its final form is likely to be included in the 2021-22 Finance Bill.