Budget 2021: Property tax changes

Two specific announcements were made in today’s Budget which relates to property. 

The first is a new Residential Property Developer Tax which was initially considered in April 2021. This will apply to accounting periods starting on or after 1 April 2022.

A rate of 4% will be levied on profits in excess of £25 million, arising from UK residential property development activities, and will be considered on a group wide basis. The payment of this tax will fall within the normal Corporation Tax payment and reporting deadlines for the companies concerned.

The second change, not announced by Rishi Sunak but hidden in the detailed information issued after his announcements, relates to the timing of reporting and paying any UK Capital Gains Tax for the disposal of UK property. Up until now, UK residents have had 30 days to submit a CGT return and make payment on account relating to the disposal of UK residential property where taxable gains have arisen. For non-UK residents this 30 day period applied to the disposal of both residential and non-residential property.

For disposals that complete after today (27 October 2021), the 30-day deadline is being extended to 60 days. This should allow taxpayers sufficient time to produce and provide more accurate figures as well as engage with professional advisers where required.

In the same detail, it has been confirmed that where UK residents dispose of UK mixed-use properties then only the residential part needs to be disclosed using this process.

Join our Budget question time – Connecting the dots webinar on Friday 29 October, where our panel of tax and finance experts will be on hand to answer your Budget related questions.

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