RPDT01200 - Introduction: basic structure of RPDT

RPDT is a tax on the trading profits of residential property developers charged in addition to standard Corporation Tax (CT). It applies to profits arising from residential property development activity from 1 April 2022, including a proportion of profits of accounting periods that straddle that date.

There are four key concepts that need to be considered when determining whether a company is an RP developer with the effect that the activities of the company (or other members of its group) fall within the scope of RPDT:

  • Is the company liable to UK Corporation Tax?
  • Is it carrying out activities of, or in connection with, the development of residential property in the UK as part of, or in support of, a trade carried on by the company or a member of its group?
  • Does the company, or a member of its group, have an interest in the land that is being developed, either directly or through holding a substantial interest in a relevant joint venture company, which will later be disposed of in the course of that trade, other than an excluded interest?
  • Does the development activity relate to residential property, in whole or in part, other than properties which are specifically excluded?

The tax base for RPDT starts with the company’s CT trading profit or loss for an accounting period, which is then adjusted to exclude profits, income, losses and other deductions or allowances that do not relate to the residential property development trade. CT trading profits include those earned as a member of a partnership, see RPDT30100. Further adjustments are made to exclude finance income or costs to arrive at the RPD profits. Companies not liable to CT, or companies that do not carry on a trade within the charge to CT, are outside the scope of the tax.

The rate of RPDT provided for by FA22/S33(1) is 4%. It is charged as if it were an amount of Corporation Tax and all the usual rules and procedures applying generally to Corporation Tax apply where relevant to RPDT by virtue of FA22/S33(3) and FA22/S45.

RPDT01100 contains a general introduction to RPDT and a list of abbreviations used.