RPDT20510 - The charge to RPDT: allowance: RPDT allowance - section 43 Finance Act 2022

RPDT is charged on profits that exceed an annual allowance of £25m which is reduced pro rata for shorter accounting periods.  Where a company is a member of a group then the allowance is shared across the members of that group and is allocated by a nominated company by reference to that company’s accounting period.

There is a default rule where no nomination is made in a group situation although HMRC expects that groups affected by RPDT will make a nomination.  FA22/S43(4)-(5) provide that where an allocating member has not been nominated then the annual allowance available to a RP developer will be £25m divided by the total number of companies that are members of the group and are within the charge to CT at the end of the accounting period of the ultimate parent of the group, the meaning of ultimate parent is provided by FA22/S48, see RPDT10500.

If an RP developer wanted a greater (or lower) share of the £25 million allowance (pro-rated if the AP is less than 12 months) then under FA22/S43(3) an allocating member can allocate an amount of their allowance.

Allocating a greater share of the allowance will result in those RP developers having lower profits subject to RPDT.

Allocating a smaller share (or none at all) of the allowance could reduce the administrative burden of group companies by, for example, reducing RPD profits in some companies to zero, to reduce the number of group companies required to make and account for RPDT payments.

Under SI 2022/266, the mechanism by which an allocating member can allocate allowances is through the submission of an allowance allocation statement, see RPDT20530.

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