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Brown plans £3bn land windfall tax

Landowners who sell sites for property development could be required to pay a new tax to help pay for the Government's plans to build tens of thousands of new homes.
Chancellor Gordon Brown is set to use Monday's Pre-Budget Report to announce plans for a new planning gain supplement levy on land for commercial and residential development.

Mr Brown will launch a consultation process to test opinion on the scheme before deciding whether to press ahead with it.

The tax could be levied at a rate of around 20 per cent, which experts said could raise as much as £3 billion a year for the massive housebuilding programme recommended in last year's report by Kate Barker calling for between 70,000 and 120,000 homes to be built each year.

The value of a piece of undeveloped land can rise tenfold once planning permission is granted, but at present the owner is allowed to keep all the profit.

Under the reported plans, the Chancellor would take a proportion of the gain, which will be earmarked for investment in new homes and community infrastructure like roads, schools and hospitals.

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