Residential Property Developer Tax: 4% above the £25 million annual allowance

Residential Property Developer Tax is an additional Corporation Tax charge on profits from UK residential property development activities of larger developers. The current rate remains 4 percent on relevant profits above the group's £25 million annual allowance, and the liability is reported and paid through the Corporation Tax framework rather than through a separate everyday HMRC payment account.

RPDT targets larger residential property developers

HMRC's RPDT manual says the tax applies to companies within the Corporation Tax charge that carry on UK residential property development activity, with a group-level annual allowance designed to exclude the first £25 million of relevant profits.

The tax is based on defined residential property development profits rather than the group's total accounting profit. Developers need a specific computation before finance knows the payment amount.

The current rate is 4 percent above the allowance

GOV.UK's 2026 rates and allowances continue to show RPDT at 4 percent with a £25 million annual allowance. The allowance can be allocated between companies in a group under the rules.

A group with £40 million of relevant RP development profit and a full £25 million allowance can have £15 million exposed to the 4 percent charge before other detailed adjustments, producing £600,000 of RPDT.

The liability is reported with Corporation Tax

Companies within scope use the RPDT supplementary information with their Company Tax Return, including CT600N where applicable. The tax is not filed as a separate excise-duty return.

Keep the property-development computation and group allowance allocation with the Corporation Tax working papers so the bank payment can be reconciled to the final company liability.

Quarterly instalment payers include RPDT in their instalments

HMRC's RPDT manual states that where a company's Corporation Tax liability is paid through quarterly instalments, RPDT is due on the same instalment dates.

Treasury therefore needs RPDT forecasts during the accounting period rather than waiting until the final annual return. Development profit changes can alter the quarterly payment requirement.

Other companies follow the normal Corporation Tax payment framework

Where quarterly instalments do not apply, payment timing follows the company's normal Corporation Tax rules. Finance should use the company's Corporation Tax payment reference and current HMRC process rather than create a separate RPDT beneficiary template without authority.

Confirm the final payment timing with the tax adviser because group size and instalment status can change as profits and associated companies change.

Keep group allowance and entity payments connected

One group can allocate the £25 million annual allowance across several developers. Internal schedules should show which company used which portion and which company paid the resulting RPDT.

After acquisitions or disposals, revisit the group computation. Changes in group membership can affect allowance allocation and forecasting even if individual development sites did not change.

Worked example: a group has two developers with relevant RP development profits of £18 million and £22 million. Total profit is £40 million. If the full £25 million allowance is available, £15 million remains chargeable at 4 percent, giving £600,000 group RPDT before any other detailed rule affects the calculation.

Use a quarterly forecast by development project. Property profits can change sharply around completions, land sales and cost revisions, so an annual flat accrual can produce large instalment corrections.

Keep RPDT separate from SDLT and ordinary Corporation Tax in management reporting even though payment runs through the CT framework. The taxes arise from different events and should be visible independently.

Use a group allowance schedule approved by the tax team before quarterly instalments are finalised. If several development companies share the £25 million allowance, changing one company's allocation can alter another company's RPDT even though its project profit did not change.

Worked example: three group developers forecast relevant profits of £12 million, £20 million and £18 million, totalling £50 million. With a full £25 million group allowance, £25 million remains potentially chargeable at 4 percent, giving £1 million of RPDT before detailed adjustments.

Track development profit separately from gross property sale proceeds. Large completion cash receipts can make the bank balance look strong while the RPDT computation depends on defined profits after allowable development costs.

Reforecast after major land or project changes. A delayed completion can move profit into another accounting period and change both RPDT and ordinary Corporation Tax instalments.

Keep the £25 million allowance under central group control. If separate development companies each assume they can use the full allowance, quarterly forecasts can materially understate the total group liability.

Review RPDT forecasts alongside financing covenants because a large tax instalment can reduce project cash and increase net debt even when development profit remains strong.