Chancellor Gordon Brown confirmed today that the controversial planning gain supplement would be delayed by at least a year in today’s Pre-Budget Report.

As revealed in Property Week last week, the government has continued to back plans for a planning gain supplement, a tax on the uplift in value following a planning consent, despite industry opposition.

It has, however, launched three consultation papers on valuing the tax, paying the tax and the need for changes to planning obligations.

Brown also confirmed that tax incentives on brownfield land would be reviewed and potentially extended to help deliver additional development, in addition to potentially exempting such sites from PGS.

His report says that ‘a workable and effective PGS, alongside a scaled-back planning obligations system, represents a fairer and more effective means of releasing land value to help finance infrastructure’.

It continues to say that ‘given the need to allow markets sufficient time to adjust to the new regime, the government now proposes that a workable and effective PGS would not be introduced earlier than 2009’.

The Government is still considering lowering tax thresholds for small-scale non-residential development, but makes no mention of the level of the tax other than to call it ‘modest’.

The report says that at least 70% of PGS revenues would be hypothecated for local infrastructure priorities and would be returned to the local authority area in which they were generated. Remaining PGS funds would be returned to the regions to help finance strategic infrastructure projects.

The report also backed yesterday’s Barker review of land use planning, saying it agreed with her overall analysis.

As widely expected, the government will now set out its proposals for planning in a white paper to be launched in the spring.