Autumn Budget 2021: Introducing the Building Safety Levy
In his Autumn 2021 Budget, the Chancellor confirmed the introduction of a 4% residential property developer tax for companies or groups of companies with profits of £25 million or more.
The new tax is called the ‘Building Safety Levy’ and will be used to fund the government’s £5.1 billion package to replace unsafe cladding on high-rise buildings in England.
The levy was first announced in February 2021 by the Secretary of State for Housing at the time, Robert Jenrick. It has since been through a consultation period prior to implementation.
The tax will apply from 1 April 2022 to profits recognised in accounting periods ending on or after that date. If an accounting period straddles 1 April 2022 the profits will be time apportioned.
Where there is a group of companies, the £25 million allowance is a group allowance and can be allocated by the group between its companies, as it sees fit.
Any tax due will be reported and paid as part of the company’s Corporation Tax return.
Given the threshold of £25 million, this levy is not expected to affect the majority of property developers, just the larger players.
We await the detail to see how loss relief rules will interact with this levy with the potential for groups to fall in and out of the scope of this tax.
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