The government has launched a consultation on plans for a new residential property developer tax, aimed at helping to raise £2bn towards a £5bn cladding remediation package.
The UK-wide tax, originally announced in February this year, will apply to residential developers’ profits over £25m under the proposals.
Calling for views on the plans, the government said the tax:
- would apply to “a measure” of developers’ profit from UK residential development;
- would only apply to in-scope profits over £25m; and
- would apply to conversion of existing buildings as well as new construction.
In an announcement about the launch of the consultation, the Treasury said ministers would set out the rate of the tax at a “future fiscal event”. The time-limited tax is due to apply from 2022. It was announced in February after the government pledged to fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18 metres and over in England.
Housing secretary Rt Hon 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.”
Financial secretary to the Treasury Jesse Norman said: “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 consultation can be found here.