TAX NEWS: Industry brands Planning Gain Supplement complex and ineffective. By Nichola Ross Martin
byA research paper commissioned by a consortium of property developers and published today has found, unsurprisingly, that the forthcoming Planning Gain Supplement (PGS) will be complicated and may fail to deliver the investment benefits intended.
The PGS, which is not expected to be implemented until 2008, is expected to be in the form of a self assessed flat levy payable on the uplift in land value on a non-domestic site once full planning permission has been granted. It is part of the government's program of planning reforms and is supposed to be a local measure with revenue raised being directed toward expanding and improving local development and infrastructure.
The Treasury issued a consultation paper on the PGS in December 2005, following which it has said very little on the subject. Although the industry has responded en-mass, the findings of the consultation have not been put in the public domain.
Timed for the Labour Party conference (followed closely by the 2007 Pre-Budget Report), the research paper is based on the results of applying the proposed PGC to 18 case studies. It suggests that some 300,000 planning applications per year could be affected by the new tax.
The government hope it will raise an extra £500 million per year, in addition to local planning agreements, which raise approximately £2.5 billion
In summary the report found:
provided in time to serve new developments.
The research was undertaken by property consultancy Knight Frank LLP and commissioned by a consortium comprising the British Property Federation (BPF), the Confederation of British Industry (CBI), the Home Builders Federation (HBF) and the Royal Institution of Chartered Surveyors (RICS). The research has been sent to the Treasury, recommending further detailed research be urgently conducted.