Britain may have tax on properties or land sold for development

Britain may have tax on properties or land sold for development

	Published : Sat, 03 Dec 2005 15:10 By : Paula Demarzio Print this Story

LONDON: The British government is planning to introduce a new tax on the profits made by landowners selling their property or land for development.

The chancellor of the exchequer Gordon Brown is expected to announce the proposal while presenting the pre-budget report Monday. There is no official word on the proposal, but sources indicate the tax will be set at 20 per cent of the profit from each site sold.

Brown feels the funds generated through this taxation can be used to build new schools, roads and health infrastructure that should go along with the government's ambitious housing building plans -- some 70,000 to 120,000 new homes to be built every year. The treasury estimates that the new "planning gain supplement", as the proposed tax is called, can boost the 2.5 billion pounds of funds generated each year through local planning agreements.

The present system provides for developers to make a contribution in cash towards building local infrastructure when they make an application to build new houses.

Property developers have criticised the plan saying it would lead to dearth of land available for housing. Chairman of property company British Land John Ritblat described the proposal as "utter madness" and suggested that it could stifle development.

Meanwhile, newspaper reports said the treasury expects to raise 3 billion pounds per year from the tax and the whole amount would be channelled back into the housebuilding programme.

Brown is expected to announce the various options on how this windfall tax can be levied so that it does not prohibit new developments.

Meanwhile, Town and Country Planning Association said the funds collected through this tax should not get into the general pot in the treasury but should go to provide local infrastructure for all communities.