Tax windfall £s at higher rate
Tax windfall £s at higher rate
WINDFALL profits from land sold for development should be subject to new tax rules, says the Anti-Greenfield Development Association.
The pressure group, which wants greenfield development restricted to areas where no alternative brownfield (redeveloped) sites are available, believes current rollover relief encourages landowners to promote farmland for development.
Ensuing windfall profits are used to buy large tracts of farmland, which inflates agricultural land values and affects the structure and fabric of the countryside, it claims.
It wants all profits above agricultural values to be subject to 40% capital gains tax, reducing the number of sales and helping to offset the higher cost of developing brownfield sites.
Alternatively, local authorities could use compulsory purchase to buy all greenfield land, compensating the landowner at a rate of four times the agricultural value at the time of purchase, says AGDA.
The land could the be sold to developers on the open market, increasing local authority revenue to provide funding to benefit local communities.
A spokesman for Smiths Gore said local authorities already made use of section 106 agreements under the Town and Country Planning Act. This requires owners to commit capital to off-site works – a direct tax on development. Such infrastructure costs could easily hit £1m, he says.
William Edwards, of Brown and Co, cautions that previous attempts to introduce tax on development – the betterment levy and development land tax – had led to a shortage of development land and subsequent inflation. *