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What is the residential property developer tax?

The introduction of the residential property developer tax (RPDT) was first announced in February 2021 and a consultation process commenced in April 2021 and concluded in October 2021. Finance Act 2022, ss 32–52 and Schedules 7, 8 and 9 set out the detailed provisions for the tax.

The government believes that the largest residential property developers should make a financial contribution to fund the high costs of removing and replacing unsafe cladding which has been used in the past on the construction of many residential buildings. It is hoped that the project will help to eliminate unsafe cladding and the fire risk it presents, reassure homeowners regarding the safety of their property and instil confidence in the UK housing market.

The RPDT is charged at a rate of 4% on profits exceeding an allowance of £25 million on UK residential property development activities. It is charged as if it were an amount of corporation tax on those profits¹ and general provisions applying to