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Land Value Tax

Terraced house Derby £210,000. Land Value Tax. Penthouse 1 Hyde Park Westminster £105,000,000. A general presentation. Land Value Tax (LVT) is. An annual nationally determined nationally collected percentage tax paid by the freeholder on the open market value

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Land Value Tax

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  1. Terraced house Derby £210,000 Land Value Tax Penthouse 1 Hyde Park Westminster £105,000,000 A general presentation

  2. Land Value Tax (LVT) is • An annual • nationally determined • nationally collected • percentage tax • paid by the freeholder • on the open market value • of all land (excluding buildings) • with no exceptions. LVT is a replacement tax, not a new tax

  3. Open market value is What someone would pay for the land given: • its location, • its permitted use. What would someone pay for: • 100 acres of hill land in Derbyshire, • 100 acres of fertile land in Lincolnshire, • 12 acres of land in Doncaster with permission to build 250 houses, • 0.1 acres of land in Chelsea with permission to build an 8 bedroom mansion. • 3,500 acres of grouse moor in Yorkshire.

  4. Benefits of LVT • Fair: those with most, pay most • Impossible to avoid • Expands the tax base • Encourages investment • Reduces land banking • Brings unused sites back into use • Repays taxpayers’ investments • Encourages best use of land • Freeholder, not tenant, pays LVT • Easy and cheap to collect

  5. What will LVT replace? • Council Tax (*) • Business Rates • Stamp Duty • Other property taxes • ??? * why Council Tax is unfair: • Penthouse at 1 Hyde Park: £105,000,000. • Band H in Westminster pays £1,421 p.a. • Terraced house in Derby: £210,000 • Band C in Derby pays £1,519 p.a.

  6. How much will it be? • All land has been registered. • We know the total value of all land. • We know which taxes LVT will replace. • Council Tax brings in £34 billion (2018/19). • Business Rates bring in £30 billion (2018/19). • So, it could be 1%, 1.5%, 2%, 2.5%, 3% ... We can’t say for certain until: Questions: • Should all land be taxed at the same rate? • Should business pay a higher rate than residential? • If so, why?

  7. Winners and losers • 83% of residential freeholders will pay less because of the increased tax base. • Those with very high value homes will pay more as LVT is phased in. • Untaxed land will be taxed. • Rural land at £10,000/acre will pay far less than development land at £350,000/acre. • Those with most will contribute most. LVT is not a panacea, it will have to go hand-in-hand with other tax reforms to simplify the tax system and reduce avoidance.

  8. Implementation • Registration of all freehold land ownership. • Valuation of all land by VOA. • Determine land value update method. • Determine which taxes to be replaced by LVT. • Determine LVT rate and any local supplements. • Determine how LVT income is to be allocated to Local Authorities. • Creation of collection/distribution system. • Phased introduction - other taxes gradually replaced by LVT.

  9. Objections (1) • “Widow in large house.” Unpaid LVT will be a lien on the property. • “We don’t know who owns the land?” The freeholders of all land will be registered. • “It’s impossible to value all land.” The VOA can do this and has been valuing since 1910. • “It’s too complicated.” Rubbish! It’s much simpler than Council Tax! • “It will be more than Council Tax.” For most people it will be less. • “Landlords will pass it on to tenants.” They can try but the market will decide. • “It will lead to over development.” No it won’t! Development is controlled by the planning process.

  10. Objections (2) • “It will put small tenant farmers out of business.” Freeholders pay LVT, not tenants. • “It will reduce the value of land.” Great! That would be a good thing for many reasons. • “It will cost too much to administer and collect.” It will be far cheaper. Freeholders are easy to identify, no exceptions, and it will be collected nationally. • “There will be endless appeals.” There will be some but the definition of value is crystal clear: “what would it sell for on the open market?” • “Tax advisers will find fiddles.” They will try, but it is the simplest of all taxes and impossible to avoid. • “Your can’t tax non-doms etc.” Unpaid LVT will be a lien on the property.

  11. Wide support • Supporters in all political parties: Green, Conservative, Labour, Liberal Democrat, SNP, Plaid Cymru. • Support from the left and right - for different reasons but mainly because it is fair, simple and unavoidable. For more information: Web: bitbarn.co.uk/lvt email: lvt@bitbarn.co.uk

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