Answers · UK 2025/26
What is the Residential Property Developer Tax (RPDT)?
The Residential Property Developer Tax (RPDT) is a 4% surcharge on the profits of large residential property developers above a £25 million annual allowance. It was introduced in April 2022 to fund remediation of unsafe cladding. Companies or groups with residential development profits below £25m are unaffected.
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**What is RPDT?** The Residential Property Developer Tax (RPDT) was introduced by the Finance Act 2022 and took effect from 1 April 2022. It is a 4% tax on the profits that large residential property developers make from UK residential property development activities, above a £25 million profit allowance. **Who pays it?** RPDT applies to companies (and groups of companies) that: - Carry out residential property development in the UK - Have UK residential property development profits exceeding £25 million per year The £25 million allowance is group-wide — a large housebuilder with many subsidiaries has one £25m allowance shared across the group. **The rate** - RPDT rate: 4% - On profits above: £25 million - In addition to: standard corporation tax (25% for profits above £250,000 from April 2023) **Example: HouseBuild Group plc** The group makes £80 million residential development profits in the year. - Less RPDT allowance: £25 million - Taxable for RPDT: £55 million - RPDT at 4%: £55 million × 4% = **£2.2 million** - This is in addition to corporation tax on the full £80 million profit **What activities are included?** RPDT applies to profits from: - Developing new residential properties for sale - Conversion of commercial property to residential - Regeneration projects where the output is residential units Non-residential development (offices, industrial), build-to-rent (where the developer retains and lets the properties), and affordable housing may be partially or fully excluded from the taxable profits. **Purpose** RPDT was introduced alongside the Building Safety Levy to fund the £5 billion government commitment to remediate dangerous cladding on buildings following the Grenfell Tower disaster.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.