Tim Palmer examines how residential property developer tax will work in practice and who will be liable to pay it.
Residential property developer tax (RPDT) is a new tax, which was introduced on 1 April 2022. It is charged on companies and groups who undertake residential property development in the UK. It is charged at 4% on the company’s annual profits that arise from residential property development in excess of £25 million. This 4% rate is much higher than commentators previously expected.
RPDT applies from 1 April 2022 to profits arising from residential property development recognised in accounting periods ending on or after that date. If a company’s accounting period straddles 1 April 2022, the profits of the accounting period needs to be time-apportioned in order to determine the amounts falling before and after the start date.
Anti-forestalling provisions prevent the acceleration of profits
