TaxCorporate TaxProperty development giant sounds tax alarm

Property development giant sounds tax alarm

Plans to introduce a land development tax face opposition

Land Securities has predicted the chancellor will introduce a land
development tax in his December pre-Budget report.

The property giant was ‘disappointed’ with government plans to introduce a
land development tax, also known as a planning gain supplement.

The FTSE100 group made the warning as it unveiled a stellar set of interim
results showing pre-tax profits rising by 89.2% to £1.18bn for the six months to
September.

‘We believe that any such levy represents a “super tax” and ignores the
existing regime of capital gains and corporation tax,’ the Land Securities board
said in a statement.

Following the announcement, analysts and tax experts said the warning from
Land Securities was a sign that a planning gain supplement was highly likely.

‘The introduction of a land development tax would be bad news,’ a property
analyst said. ‘The Treasury has said nothing, but the rumour has started
somewhere. I would be surprised if a land development tax was not mentioned in
the pre-Budget report.’

Mike Warburton, senior tax partner at Grant Thornton, said that various land
development taxes had been used in the past, and although a reintroduction of
the levy would not be as aggressive as in previous years, it was a possibility.

‘The idea of a land development tax has been rumbling in the background for
some time. The government needs to raise more money and it is not going to lose
votes by introducing this tax,’ said Warburton.

The commercial property industry makes up 6% of the UK’s GDP according to the
British Property Federation, and attracts investment in the region of £50bn per
annum.

A planning gain supplement would tap into this wealth by levying a tax on the
value acquired from developing a property.

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