Charities that build and sell property could face heavy charges under a tax to be introduced by the Communities and Local Government department, charity law experts have warned.
The consultation on the suggested community infrastructure levy, a tax on land that has been given planning permission, will close on 23 October. But the type and range of charitable developments it will affect and how much tax it will impose on them is still to be decided.
The tax will not apply to developments used for charitable purposes, but it is feared it will apply to homes built by charities and then sold, including social housing and specialist homes for the elderly and disabled.
Nicola Evans, a senior associate at specialist charity law firm Bircham Dyson Bell, said charities would also face problems if they constructed property for their own use and later had to sell it.
She said the Government was aware of the problem. "We hope that the CLG will create an exemption for charities doing this kind of work," she said.
A spokesman for the National Housing Federation said the levy could have an adverse effect on the activities of housing associations.
"Imposing another cost on developments will simply make many of them unviable," he said. "We want all affordable housing developments to be exempted from the levy."