The property industry needs targeted tax credits to speed up decarbonisation, the British Property Federation has told the government.
It has called on ministers to introduce tax credits for investment in new technology and equipment to make existing buildings more environmentally friendly.
In its response to a consultation on the reform of capital allowances, the BPF said the tax relief should be available for projects that support the government’s net zero and levelling-up ambitions.
It added that a new tax credit system should be introduced, similar to that which applies to research and development spending.
The BPF said the credits should be used to replace environmentally inefficient plant and machinery in existing buildings, sustainably retrofit or repurpose existing buildings and help with town centre regeneration projects.
BPF director of finance policy Ion Fletcher said: “Meeting net zero and levelling-up aspirations will require a huge investment in the built environment by the property sector, working in partnership with government. The sooner this investment is made, the better for all of us.
“It is time for a radical change to the capital allowances rules to help accelerate spending on decarbonisation and town centre regeneration.”
For some developments, including the most up-to-date environmental features would render the project financially unviable, the BPF added. A new tax allowance for capital spending on decarbonisation and town centre regeneration would help this.
The BPF said this should be accompanied by a cash tax credit that companies can claim where they have no taxable profits, as is often the case during a development or refurbishment.
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