Preparing for LVT - getting the facts

Facts are the foundations on which decisions are made.

We need facts and the UK has the tools to do the job - quickly and at minimum cost.

LVT has supporters in all political parties but before MPs, and the rest of us, can decide the future of property taxes, and how Local Authorities should be funded, we need accurate facts.

We don’t have those facts.

Politicians hate saying “no”, so, to avoid making decisions, they kick things into the long grass by setting up a “commission” or requesting “more research”. By the time the commission reports, or the research is presented, the relevant minister will have moved on so someone else will have to worry about it.

All this wastes money - millions!

What facts do we need?

• The value of all land in the country.

  This can be done by the Valuation Office Agency (VOA) which has been valuing property and land for over 100 years

• Details of all freeholders in the country.

  This can be done by the Land Registry (HMLR) which already records details of freeholds covering 89% of our land.

• The amount that needs to be raised in tax.

  All of us, as citizens, are entitled to the same services, and the same quality of service, no matter where we live. Our current method of funding for Local Authorities makes this impossible and unfair - which explains why Council Tax is universally hated because we appear to be paying more and getting less!

  Government and LAs must agree what services are to be delivered by LAs then government can provide 100% of the funding.

Laying the foundations

We propose that the government begins “Preparing for LVT - getting the facts” because:

• it can be done now, straight away, immediately,

• it does not require a manifesto commitment to implement LVT,

• it can be done in a very short time - between one and two years,

• it is not expensive - the resources and skills are available.

Worrying facts for a democracy

In 2024 less than 60% of the electorate bothered to vote - the second worst turnout ever. 80% of the electorate did not vote Labour.

Of those who voted, 34% voted Labour, 38% voted Conservative or Reform

Of OECD countries only Czechia has a lower level of trust in government than the UK.

Something is wrong and the reasons are simple.

People:

• feel alienated, they feel the system is unfair and they don’t trust politicians.

• are concerned about the apparent corruption of our politics: donations gifts, freebies, special interest groups, free trips abroad.

• see money being wasted: HS2, Heathrow runway, carbon capture, Hinkley Point nuclear power station, fighting other countries’ wars, etc.

• are fed up with the grossly unfair distribution of wealth in our society.

• are fed up with the shortage of homes to buy or rent - and their cost!

The best way to overcome alienation is to show that politicians care about our own citizens and want to make the system fairer for all.

Please look at the end of the comments by the Norwegian Minister of Finance.

We urge all politicians, and everyone promoting a fairer society, to urge the government to make the very small investment required for “Preparing for LVT - getting the facts.”

Important

Preparation does not imply introduction - but, one way or the other, we need the facts!

Suggestions for initial steps

We don’t need more hot air, we don’t need commissions, we don’t need yet more research - we just need real-world facts using the resources we already have.

Please also see the article “Data required to implement LVT” which covers problems with existing systems and makes suggestions for improvements.

Initial steps

• Determine the person who will lead, champion and be responsible for this process.

• Produce a briefing paper (sample below) to be circulated to all those represented at an initial meeting.

• Bring together representatives of involved departments, including:

• HM Land Registry (HMLR).

• HM Revenue and Customs (HMRC).

• Valuation Office Agency (VOA).

• Local Authorities (LAs).

• Office of National Statistics (ONS)

• Ministry of Housing Communities and Local Government (MHCLG).

• Department for Environment, Food & Rural Affairs (DEFRA).

• Government Digital Services (GDS)

• Those organisations that have been studying and promoting LVT.

• Create a taskforce to implement the specific tasks that need to be done.

Suggested task list

• VOA to provide an estimate of the land value underlying every freehold title held by HMLR.

  Two pilot studies (Note 1 below) have shown:

  “no insurmountable issues” and

  “the trial proved relatively easy to undertake from a practical point of view. The apparent lack of any obstacles to the professional assembling of the raw data is extremely encouraging ... valuations based on the undeveloped value of the land present no special problems to a professional valuer."

• Add the value of land, and any options on land, to the data held by HMLR.

• Start the regular updating of HMLR data when anything changes - such as an option taken out on land.

• Complete the register held by HMLR with an absolute deadline for titles not yet registered.

• Make modifications to the format of data held by HMLR to ensure it is suitable for implementing LVT - including digital access to values and freeholder details.

  Note: there are no privacy implications here - similar data is freely available online from Companies House about directors and shareholders.

• Ensure that the data held by HMLR is suitable for free and open access using typical database queries.

• Produce a cadastral map (as in Denmark) based on the data held by HMLR.

• Produce an expanded and definitive list of services that must be supplied by LAs.

• Assess the cost of those services for every LA.

• Make an initial assessment for the basic LVT rate assuming it will replace Council Tax and Business rates.

• Examine the effects of the LVT rate on different parts of the country.

• Determine what has to be done to mitigate the effects of LVT on domestic homeowners who, when the phasing-in period for LVT is complete, will be paying over 25% more than they were paying in Council Tax when implementation begins. (Note 2 below.)

Notes:

• Note 1: the studies were:

  • Glasgow City Council, 2009, "Local Taxation Working Group: overall findings"

  • Oxfordshire County Council, 2005, "The Oxfordshire Land Value Tax Study."

• Note 2: suggested mitigation methods are:

  • Phasing-in LVT over 10 years so there are no sudden increases.

  • Providing a deferment option using charges (liens) against freeholds so any outstanding LVT will be paid when the freehold is next transferred or sold.

  • Find ways to handle specific problems in high value areas such as the South East. Please see the end of our “Keep It Simple” article for a proposal.

Briefing paper and responsibilities

Government has not taken any decision about the implementation of Land Value Tax for England (LVT).

LVT is an annual, nationally determined, nationally collected, percentage tax, paid by the freeholder, on the open market value of all land with no exceptions.

All land has value even if that value is zero. Land with a value of zero has no economic use, no asset value and cannot be sold on the open market.

The basic LVT rate to be paid by freeholders is calculated as:

LR = AR / LV * 100

Where:

• LR is the LVT rate as a percentage which applies to all land with no exceptions.

• AR is the amount to be raised.

• LV is the total value of land in the country.

The key features of LVT are that it is simple to understand, fairer than any taxes it will replace and impossible to avoid because it permits no exceptions and no special cases. Nothing most be done to make it less simple, less fair or possible to avoid through the use of loopholes.

The initial proposal is that 100% of Local Authority (LA) expenditure will be covered by government and that LVT will raise the equivalent amount. This will enable Council Tax and Business Rates to be scrapped.

Before the first meeting responsible departments should provide estimates of the resources they require, and associated costs, to carry out the tasks assigned to them.

Before a decision can be made government needs to know:

• The total value of all land in the country.

  VOA and HMLR would be responsible for this.

  The data held by HMLR must include details of the use of properties currently liable for Council Tax and their associated land value. This will enable LAs to add supplements if they wish.

• The total costs of LA expenditure.

  MHCLG would be responsible for this following negotiations with LAs.

• What the basic rate of LVT will be.

  HMRC will determine this when the total value of land and the total costs of LA expenditure are known.

• What national and local supplements would be added to the basic rate.

  National supplement will be determined by government, local supplements will be determined by LAs.

• How the tax will be collected.

  HMRC will be responsible for this using the databases held by HMLR.

• How disputes over valuations will be handled.

  VOA will be responsible for this.

• How the data will be made available to the public.

  GDS will be responsible for this using the databases held by HMLR.

• The impact of LVT on different parts of the population.

  ONS will be responsible for this using the databases held by HMLR.

• How LVT could be implemented to enable the population and the land market to adjust.

  MHCLG and DEFRA will be responsible for this as soon as the LVT basic rate is known.