What is the Residential Property Developer Tax (RPDT)? What is residential property and who is a developer? Are there any allowances or exemptions?

This is a freeview 'At a glance' guide to Residential Property Developer Tax.

What is Residential Property Developer Tax?

From 1 April 2022, the Residential Property Developer Tax (RPDT) will be levied on the profits of large companies. 

  • RPDT is charged at a rate of 4%
  • On profits that arise from residential property development and exceed the annual allowance.
  • The annual allowance is £25 million (pro-rata for short accounting periods).
  • Companies must be subject to UK Corporation Tax
  • Profits are calculated after adjustments for tax purposes but exclude amongst other things, loss or group relief and loan relationship debits/credits (e.g. finance costs such as interest).
  • Allowances may not be claimed in respect of capital expenditure. 
  • Anti-forestalling provisions prevent the acceleration of profits to an accounting period ending before 1 April 2022, as a result of arrangements entered into on or after 29 April 2021.
  • Exemptions apply to not-for-profit housing companies; an exit charge will apply if the company ceases to be a non-profit housing company.

What is Residential Property Development?

The activities that are caught within this category are quite wide-ranging; they must be carried out by a developer:

  • On, or in connection with, land that the developer has (or has had) an interest in (including through related Group companies and joint ventures).
  • For the purposes of the development of residential property.
  • The property or land must be held as trading stock (Property development as opposed to Property investment).
  • Activities include:
    • Dealing in residential property.
    • Designing.
    • Seeking planning permission.
    • Construction or adaptation.
    • Marketing.
    • Managing.
    • Any other ancillary activity.

What is residential property?

A residential property is any building used as a dwelling. This includes buildings in the process of being constructed or adapted for such use and the accompanying gardens and grounds. Land with planning permission, or where it is being sought, will also fall within the definition if this would cause the land or buildings to meet the criteria.

Exclusions include:

  • Residential accommodation provided for children, individuals requiring personal care (elderly, disabled or those with dependency issues).
  • Residential accommodation for the armed or emergency services and hospital workers.
  • Hospitals or hospices.
  • Temporary sheltered accommodation.
  • Prisons.
  • Hotels or similar.
  • Monasteries/Nunneries etc.
  • Student accommodation.


  • The annual allowance is divided by the number of companies in the group unless an 'allocating member' is nominated when the allowance can be allocated as directed.
  • Group companies may only claim an allowance when there is an allocating member if a notional allowance statement is submitted to HMRC.


The relevant profits and tax within the scope of RPDT will be reported on the company’s tax return and the tax due will be payable alongside any other Corporation Tax liability.

Useful guides on this topic

Profits from dealing in or developing UK land
A guide to the rules which replaced the old transactions in land provisions and extended UK taxation to all profits from trading in and developing UK land, regardless of residence.

Small print and links

HMRC Property Developer Tax Manual


The Residential Property Developer Tax (Allocation of Allowance) Regulations 2022 

Part 2 Finance Act 2022

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