Finance Act 2022

Key concepts

34 Meaning of “residential property developer”

(1) A company is a residential property developer (“RP developer”) for the purposes of this Part if—

(a) the company carries on residential property development activities, or

(b) the company, or the company together with any other company which is a member of the same group as it, has or have a substantial interest in a relevant joint venture company.

(2) See section 40 for the meaning of “relevant joint venture company” and the meaning of “substantial interest” in a relevant joint venture company.

(3) A non-profit housing company is not an RP developer.

(4) A company is a “non-profit housing company” for the purposes of this Part if it is—

(a) a non-profit registered provider of social housing;

(b) a registered social landlord under Part 1 of the Housing Act 1996 (registered social landlords in Wales);

(c) a registered social landlord under Part 2 of the Housing (Scotland) Act 2010 (asp 17);

(d) a registered housing association under Chapter 2 of Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I.));

(e) a wholly owned subsidiary of a company within paragraphs (a) to (d).

(5) The Treasury may by regulations make provision amending the definition of a non-profit housing company; and the regulations may make consequential provision amending this Part.

35 Meaning of “residential property development activities”

(1) Activities are residential property development activities (“RPD activities”) for the purposes of this Part if they are carried on by a company—

(a) on, or in connection with, land in the United Kingdom in which the company has, or, where subsection (3) applies, had, an interest, and

(b) for the purposes of, or in connection with, the development of residential property.

(2) For the purposes of this Part activities that are carried on for the purposes of, or in connection with, the development of residential property include—

(a) dealing in residential property;

(b) designing it;

(c) seeking planning permission in relation to it;

(d) constructing or adapting it;

(e) marketing it;

(f) managing it;

(g) any activities ancillary to any of these other activities.

(3) This subsection applies where—

(a) a company carries on activities within subsection (2)(b), (c) or (d), or within subsection (2)(g) so far as relating to those activities, in relation to land after ceasing to have an interest in the land,

(b) the activities were planned or anticipated at the time the company ceased to have the interest in the land, and

(c) the activities are not carried on solely in connection with areas of the land that do not constitute residential property.

36 Residential property development activities: “interest in land”

(1) A company has an interest in land for the purposes of this Part if—

(a) the company or a related company has—

(i) an estate, interest, right or power in or over the land, or

(ii) the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over the land,

other than an excluded interest, and

(b) that estate, interest, right or power forms part of the company’s, or the related company’s, trading stock of a trade which includes the carrying on of activities for the purposes of, or in connection with, the development of residential property.

(2) The following interests are “excluded interests”—

(a) any interest or right held for securing the payment of money or the performance of any other obligation, and

(b) a licence to use or occupy land.

(3) But where a company (C) has an interest within subsection (2)(b), that interest is not an excluded interest if it is granted as a result of arrangements to which C or a related company is party and under which an estate in the land in question is to be conveyed by another party to the arrangements at the direction or request of C or a related company to any of—

(a) a person who is not party to the arrangements,

(b) C, or

(c) a company related to C.

(4) For the purposes of subsection (3)—

(a) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

(b) a conveyance by a person as nominee or bare trustee is to be treated as also being a conveyance by the person or persons for whom they are the nominee or trustee.

(5) For the purposes of this section, a company (A) is related to another company (B) if—

(a) A is a member of a group of which B is a member;

(b) A is a relevant joint venture company and B, or B together with any other company which is a member of a group of which B is a member, has or have a substantial interest in A.

(6) In this section “trading stock”, in relation to a trade, means an estate, interest, right or power in or over land—

(a) which is disposed of in the ordinary course of the trade, or

(b) which would be so disposed of on the completion of activities that are carried on for the purposes of, or in connection with, the development of residential property.

(7) For the purposes of subsection (6), a licence falling within subsection (3) to use or occupy land is to be treated as being disposed of when an estate in the land is, or would be, conveyed under the arrangements as a result of which the licence is granted.

(8) In this section, references to a disposal have the same meaning as in TCGA 1992 (see section 21 of that Act (assets and disposals)).

(9) If a relevant joint venture company is related to a company and is a member of a group, the relevant joint venture company is treated for the purposes of this section—

(a) as having any asset which any other member of the group has, and

(b) as if anything done by or in relation to any other member of the group were done by or in relation to it.

37 Residential property development activities: “residential property”

(1) For the purposes of this Part “residential property” means—

(a) a building or part of a building that is designed or adapted, or is in the process of being constructed or adapted, for use as a dwelling,

(b) land that is or forms part of the garden or grounds of a building or part within paragraph (a) (including any building or structure on such land),

(c) an interest in or right over land that subsists for the benefit of a building or part within paragraph (a) or of land within paragraph (b), or

(d) land in respect of which planning permission is being sought or has been granted so that it, or a building or part of a building on, interest in or right over it, will fall within any of paragraphs (a) to (c).

(2) A building is not within subsection (1)(a) if it is designed or adapted, or in the process of being constructed or adapted, for use primarily as—

(a) a home or other institution providing residential accommodation for children;

(b) a home or other institution providing residential accommodation with personal care for persons in need of personal care because of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder;

(c) residential accommodation for members of the armed forces;

(d) residential accommodation for members of the emergency services or persons working in a hospital;

(e) a hospital or hospice;

(f) temporary sheltered accommodation;

(g) a prison or similar establishment;

(h) a hotel or inn or similar establishment;

(i) a monastery, nunnery or similar establishment;

(j) student accommodation.

(3) For the purposes of subsection (2)(j) use primarily as “student accommodation” means use by persons who will occupy the building wholly or mainly for undertaking a course of education (including school pupils) where it is reasonable to expect that the building will be occupied by such persons on at least 165 days a year.

38 Meaning of “residential property developer profits or losses”

An RP developer’s residential property developer profits or losses (“RPD profits” or “RPD losses”) for an accounting period are calculated as follows (with a positive figure being RPD profits and a negative figure being RPD losses)—

A + B - C - D - E

where—

• “A” is the amount of the RP developer’s adjusted trading profits, or as the case may be, adjusted trading losses (expressed as a negative figure) for the accounting period (see section 39);

• “B” is the amount of any joint venture profits, or as the case may be, losses (expressed as a negative figure) that are attributable to the RP developer for the accounting period (see section 40);

• “C” is the amount of allowable RPDT loss relief which the RP developer is given for the accounting period (see Part 1 of Schedule 7);

• “D” is the amount of allowable RPDT group relief claimed by the RP developer for the accounting period (see Part 2 of Schedule 7);

• “E” is the amount of allowable RPDT group relief for carried-forward losses claimed by the RP developer for the accounting period (see Part 3 of Schedule 7).