Real Estate
A solid foundation for an uncertain property market
This tax is ostensibly part of the Government’s targeted approach to deal with unsafe cladding following the tragic Grenfell Tower fire.
The Treasury response to the latest consultation on the tax was published today. Although this has been trailed for some time now (with draft legislation having been published last month following previous consultations), the rate was confirmed at 4% of adjusted profits exceeding £25m per year across a group.
Conspicuous by its absence was any time limit to the measure; when the Government first announced the measure, it had been at pains to note that the measure was specifically targeted at raising £2bn over 10 years. This is also mentioned in the response to the consultation published today, however, the document notes that a “sunset provision” to time limit the application of the tax was considered inappropriate. Developers will have to wait and see what happens when the £2bn has finally been raised…
Following the consultations into the tax treatment of Asset Holding Companies, a number of issues in relation to the REIT regime were highlighted in responses. As a result, changes to the regime are to be introduced to reduce constraints and administrative burdens. The key changes are:
The removal of the requirement for shares to be admitted to trading (and the burdens that imposes), could result in more entities electing into the rules.
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