RPDT01100 - Introduction: background

The residential property developer tax (RPDT) forms part of a building safety package announced in February 2021 by the then Secretary of State at the Ministry for Housing Communities and Local Government (MHCLG) (temporarily the Department for Levelling Up, Housing and Communities, (DLUHC)).  Its aim is to obtain a contribution from the UK’s largest residential property developers towards the Government’s cost of dealing with defective cladding in the UK’s high-rise housing stock discovered following the Grenfell Tower fire tragedy in June 2017. 

The other revenue-raising measure announced as part of the Building Safety package is the Building Safety Levy, a charge in respect of certain high-rise developments levied at the pre-construction phase.  The levy will not be administered by HMRC but will be paid as part of the building regulatory process and is the responsibility of MHCLG.

RPDT is intended to raise at least £2bn over a ten-year period.  The Government has stated that the tax should be time limited and will be repealed when its aims have been achieved.

The tax is limited to the largest residential property developers by each group having an annual allowance of £25 million, with only profits from residential property development activities above this amount being subject to the tax.  For companies within scope of the tax, RPDT is charged at 4% on residential property development profits that exceed their annual allowance.

RPDT is based on a company’s trading profits from residential property development activity in the UK.  It does not apply to chargeable gains from land that is not disposed of by way of trade nor to gains on shares.  See RPDT20210.

The following abbreviations are used in this manual –

AP – accounting period for Corporation Tax purposes

APE – accounting period ending (on date shown)

CT – Corporation Tax

CTMXXXXX – HMRC Corporation Tax Manual page XXXXX

CTA09 – the Corporation Tax Act 2009

CTA10 – the Corporation Tax Act 2010

FAXX – the Finance Act for year XXXX

JV – joint venture

PIMXXXX – HMRC Property Income Manual page XXXX

RP – residential property as used in defined term “RP developer”

RPD – residential property developer in context of RPD profits or losses

RPD – residential property development in context of RPD activities

RPDT – residential property developer

RPDTXXXXX – HMRC Residential Property Development Tax Manual (this manual)

SDLT – stamp duty land tax

SI 2022/266 - The Residential Property Developer Tax (Allocation of Allowance) Regulations 2022

TCGA92 – the Taxation of Chargeable Gains Act 1992

TMA70 – the Taxes Management Act 1970

TIOPA10 – the Taxation (International and Other Provisions) Act 2010