The country’s largest home builders could pay more than Â£ 200million a year into the government’s new siding tax, research has found.
Private home builders, such as Persimmon, could pay up to Â£ 40million a year into the government’s new siding tax, with the combined tax contribution of the top 11 home builders amounting to over Â£ 200million of pounds sterling.
The tax, details of which were unveiled by Chancellor Rishi Sunak in yesterday’s budget, would levy a 4% tax on private developer profits of more than Â£ 25million to help pay for the cost of work to remediation of developments across the country.
The government has pledged Â£ 5 billion to rehabilitate the coatings, the figure including royalty payments. The Housing, Communities and Local Government Select Committee has estimated that the total cost of rehabilitating the hazardous pavements could amount to at least Â£ 15bn.
Sirius Property Finance research looked at the profits of the top 11 home builders in 2019 – the last year of annual accounts before the coronavirus pandemic – and calculated the combined level of tax that would be paid had it applied this year.
Research found that four home builders would each pay more than Â£ 30million in the new levy if the 2019 figures were taken into account.
Persimmon had a total potential taxable profit of Â£ 1.04bn in 2019, which would recover Â£ 40.6m for the tax on coatings. Barratt Homes made a profit of Â£ 909.8million which would result in the payment of Â£ 35.4million. Taylor Wimpey’s Â£ 850.5million profit would see Â£ 33million paid and Berkeley’s Â£ 775million profit would see Â£ 30.8million paid into the tax.
Total profits for the 11 home builders were Â£ 5.4bn in 2019, with a tax of 4% above the Â£ 25m threshold for a total of Â£ 204.9m .
Some form of siding tax had been hinted at by the government for months before the budget was announced. The government hopes the tax will raise Â£ 2bn to help finance the Â£ 5bn building security fund announced earlier this year.
During the budget, Mr Sunak said: ‘We are also confirming Â£ 5bn to remove hazardous coatings from most at risk buildings, funded in part by the residential property developers tax, which I can confirm , will be levied on developers with profits exceeding Â£ 25million. at a rate of 4%.
The Ministry of Upgrading, Housing and Communities has been contacted for comment.
How Home Builders Will Be Affected (Top 11 Home Builders)
|Developer||Profit before taxes 2019||Tax allowance||Potential taxable profit (plus a threshold of Â£ 25million)||RPD tax rate at 4%||Sources (annual developer reports)|
|Khaki||Â£ 1,040,800,000||Â£ 25,000,000||Â£ 1,015,800,000||Â£ 40,632,000||Connect|
|Barratt||Â£ 909,800,000||Â£ 25,000,000||Â£ 884,800,000||Â£ 35,392,000||Connect|
|Taylor wimpey||Â£ 850,500,000||Â£ 25,000,000||Â£ 825,500,000||Â£ 33,020,000||Connect|
|Berkeley||Â£ 775,200,000||Â£ 25,000,000||Â£ 750,200,000||Â£ 30,008,000||Connect|
|Bellway||Â£ 662,600,000||Â£ 25,000,000||Â£ 637,600,000||Â£ 25,504,000||Connect|
|Redrow||Â£ 406,000,000||Â£ 25,000,000||Â£ 381,000,000||Â£ 15,240,000||Connect|
|The countryside||Â£ 234,400,000||Â£ 25,000,000||Â£ 209,400,000||Â£ 8,376,000||Connect|
|Bovis Vistry Group||Â£ 193,800,000||Â£ 25,000,000||Â£ 168,800,000||Â£ 6,752,000||Connect|
|Miller||Â£ 168,000,000||Â£ 25,000,000||Â£ 143,000,000||Â£ 5,720,000||Connect|
|Crest Nicholson||121 Â£ 100,000||Â£ 25,000,000||96 Â£ 100,000||Â£ 3,844,000||Connect|
|Keepmoat||Â£ 37,700,000||Â£ 25,000,000||Â£ 12,700,000||Â£ 508,000||Connect|
|Total||Â£ 5,399,900,000||–||Â£ 5,124,900,000||Â£ 204,996,000|