Large developments would pay less under planning gain supplement than under the present system of section 106 obligations, the BPF revealed this morning.

The government is considering whether to introduce planning gain supplement, under which developers would pay tax on the increased value of land once it received planning permission. Section 106 agreements, under which developers provide infrastructure in return for planning consent, would be scaled back under the new regime.

However, research carried out by Knight Frank on behalf of the BPF shows that many developers would pay less in tax under PGS than they do already under section 106. It was based on 18 development case studies and interviews with developers and landowners.

The report said: ´It is not simply a case that all development would face a higher development tax burden were PGS.´

The research found that `large scale urban expansion developments and large Town Centre developments were likely to contribute significantly less planning gain with PGS and scaled back section 106 agreements by value compared with current section 106 agreements`.

The penalties, said the report, were more likely to borne by small scale development proposals. `Our research indicates a possible adverse affect of PGS on schemes which have not had section 106 agreements in the past, such as one example of industrial development.`