The Residential Property Developer Tax (Allocation of Allowance) Regulations, SI 2022/266, provide the technical requirements needed to allow HMRC to administer the allowance for the residential property developer tax (RPDT) in relation to groups of companies and joint ventures.
The new tax will apply from 1 April 2022 to companies with profits arising from UK residential property development exceeding £25m a year. Profits in excess of this allowance will be taxed at a rate of 4%.
Where a company is a member of a group, the £25m allowance is, by default, shared equally between all group members subject to corporation tax (FA 2022 s 43(4)). Where a group opts instead to allocate the allowance between its members in different proportions, the regulations provide that the group must first nominate a member company as its ‘allocating member’ and submit an allocation statement to HMRC.
The regulations also cover the position for joint venture companies. FA 2022 s 44 provides the framework for calculating the notional allowance for a joint venture company where a company that is not liable to RPDT (an ‘excluded body’) has a substantial interest in the joint venture company. The regulations ensure that excluded bodies in joint ventures do not benefit from an allowance unless they submit an allowance statement to HMRC. The regulations come into force on 1 April 2022.
The Residential Property Developer Tax (Allocation of Allowance) Regulations, SI 2022/266, provide the technical requirements needed to allow HMRC to administer the allowance for the residential property developer tax (RPDT) in relation to groups of companies and joint ventures.
The new tax will apply from 1 April 2022 to companies with profits arising from UK residential property development exceeding £25m a year. Profits in excess of this allowance will be taxed at a rate of 4%.
Where a company is a member of a group, the £25m allowance is, by default, shared equally between all group members subject to corporation tax (FA 2022 s 43(4)). Where a group opts instead to allocate the allowance between its members in different proportions, the regulations provide that the group must first nominate a member company as its ‘allocating member’ and submit an allocation statement to HMRC.
The regulations also cover the position for joint venture companies. FA 2022 s 44 provides the framework for calculating the notional allowance for a joint venture company where a company that is not liable to RPDT (an ‘excluded body’) has a substantial interest in the joint venture company. The regulations ensure that excluded bodies in joint ventures do not benefit from an allowance unless they submit an allowance statement to HMRC. The regulations come into force on 1 April 2022.
