Property development is considered a trade, which means that provided certain conditions are met, a property developer may be afforded a number of generous tax reliefs. However, the flip side of this is that they may also be subject to higher rates of tax on profits made from developing property than if they were investing in property. There are also important SDLT and VAT considerations.
It is common, for commercial purposes, for property developers to undertake each development via a separate special purpose vehicle (SPV), but there have been a number of changes to the taxation of UK property over recent years which need to be considered
Whilst this may still be the right approach, there are a variety of suitable structures available to developers and which one is right often depends on each developers’ specific facts and circumstances.
There are, of course, also commercial factors which need to be considered such as the ability to obtain funding, retaining control over the assets and personal risk and liability.
We are experienced in taking a holistic view towards tax advice for property developers, ensuring that:
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Property development is usually treated as a trading activity, meaning profits are subject to income or corporation tax rather than capital gains tax. While this can mean higher tax rates, certain reliefs may be available if you structure things correctly.
Developers may be eligible for various tax reliefs, such as capital allowances, reduced VAT liabilities, and business asset disposal relief (in specific scenarios). We help you identify and claim the reliefs most relevant to your projects.
A special purpose vehicle (SPV) is a common structure used to isolate risk and secure funding, but it’s not always the best fit for every developer. We assess your situation to recommend the right structure based on tax efficiency, liability, and commercial goals.
Both VAT and Stamp Duty Land Tax (SDLT) can have significant impacts on development costs and cashflow. We help ensure VAT is handled properly on purchases and sales, and that SDLT is correctly calculated based on the type of property and transaction.
Yes. We provide long-term planning advice to help you pass your business on efficiently, reduce inheritance tax exposure, and ensure the right legal and tax structures are in place for a smooth transition to the next generation.
