New ‘cladding tax’ to start in 2022/23
A new residential property developer tax (RPDT), announced in Autumn Budget 2021, will come into effect from April 2022.
A 4% tax on profits over a £25 million threshold will apply for the 2022/23 tax year to UK companies involved in residential property development.
First mooted in February 2021, the revenue from the RPDT will be used to support the £5 billion the Government is investing to remove unsafe cladding from buildings at risk of fires.
The Treasury said the tax is going ahead "to ensure that the largest developers make a fair contribution to help pay for building safety remediation".
Between the 2022/23 and 2026/27 tax years, the Treasury estimates the RPDT to raise around £1.125bn.
The RPDT will be collected from a company's corporation tax return.
Tomer Aboody, director of property lender MT Finance, said:
"Cladding is a huge and deeply unfair issue, which is hitting many people hard.
"Making further funds available to deal with the cladding crisis is welcome and will help those people trapped in their homes with an additional 4% on developers with profits of more than £25m."
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