Experts criticise the new cladding tax

Feb 21, 2022
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
Cladding Tax

Some senior figures in the construction industry have criticised the Government for focussing the new cladding tax on UK-based developers, as international developers will not be subject to the new tax.


What is the new cladding tax and when will it be introduced?

The residential property developer tax (RPDT) is a 4% tax on profits exceeding £25 million, which will affect UK developers from 1 April 2022. This tax was announced by the Government to help fund the removal of unsafe cladding following the Grenfell tower fire.


Who has criticised the new cladding tax?

When housing secretary Michael Gove announced plans to force UK developers to pay £4bn towards the removal of unsafe cladding, developers were outraged. In his announcement, he said that developers need to take responsibility and fix dangerous cladding.

John Mulryan, group managing director at Ballymore said that he believes that the company will be paying almost 6% on the tax due to come into effect this year as large developers cannot offset finance costs. In addition, he believes that all parties responsible for cladding should share the burden, not just developers.

Policy director at the Homes Builders Federation, David O’Leary later questioned the committee on why UK developers were subject to the cladding tax and foreign developers were not. The policy director said it feels like an unfair outcome when international developers can come in and not be subject to the same taxes as UK developers.



To summarise many UK-based property developers believe the new cladding tax is unfair as foreign developers and other responsible parties don’t have to pay any additional tax. However, housing secretary Michael Gove believes that developers need to take responsibility for dangerous cladding.


What’s next?

If your business is going to be affected by this you can contact our tax experts who can advise you on what to do next. If you would like to see more updates from us you can sign up for our sector-specific newsletters.


How can we help?

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster, and Northampton.

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, and Corporation Tax and Capital Taxes.


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Stephen Charles

Tax Partner, Sheffield

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