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HM Treasury consults on new housing developer tax
HM Treasury has launched a consultation on the design of a new tax on residential property developers.
The tax was first announced in February, when government pledged to fully fund the cost of replacing unsafe cladding for all leaseholders in residential buildings of 18 metres and higher in England.
To help pay for the work, government is introducing a tax and a Gateway 2 levy to be applied when developers seek permission to develop certain high-rise buildings.
The government wants feedback on features of the proposed tax, including that it applies to a measure of developers’ profits from UK residential projects; that it applies only to profits over £25m; and that it applies to conversion of existing buildings, as well as new-builds.
The tax is due to come in from 2022 and is intended to raise £2bn over 10 years to help pay for the cost of cladding remediation works.
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The rate of the tax will be set at a future date.
The government said it believes that it’s right for residential property developers who will benefit from restoration of confidence in the housing market to help fund the significant costs associated with removing unsafe cladding.
Housing secretary Robert Jenrick (pictured) said: “We’re making the biggest improvement to building safety standards in a generation, investing more than £5bn to protect leaseholders from the cost of replacing unsafe cladding on their homes and ensuring industry is held to account for the wrongs of the past.
“This tax will strike the right balance between developers making a contribution and ensuring fairness to the taxpayer.
Financial secretary to the Treasury, Jesse Norman, said: “Ending the use of unsafe cladding is a priority for the government, as it builds back better from the pandemic. Given the significant costs associated with unsafe cladding, it’s right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.
“The government wants to ensure this tax is proportionate and works as intended,” he said.