LVT: FAQ

Please read the LVT: what is it? page for details of LVT before reading this page.

Please read the LVT: objections page for our response to objections made to LVT.

Please contact us if your question is not answered here.

On this page:

What will be the LVT rate?

LVT rate = taxes-to-be-replaced / total-land-value * 100

Please see the top of our "Facts and figures" page for an example showing the calculation of LVT rate.

The rate will be set after the initial planning stage when we will know:

  • Who owns all the land in the country - freeholder details will be held on the Land Register.
  • The market value of all land in the country.
  • The income generated by the taxes that LVT will replace - initially Council Tax and other property taxes.

One thing is for sure, the overwhelming majority of people will be paying less tax than with Council Tax - simply because the tax base has been increased to cover all land.

Will the rate be the same everywhere?

It could be.

It could also be used to solve some distortions in the ownership of land.

For example, the LVT rate could be doubled:

  • where the freeholder is not a UK citizen resident in the UK for tax purposes,
  • where the freeholder is not a company or trust registered in the UK and resident in the UK for tax purposes,
  • for residential land which is not the primary residence of the freeholder.

Will there be exceptions?

No.

All land in the country will be subject to LVT, no matter who owns it, where it is or what it is used for.

Exceptions create loopholes - a job opportunity scheme for lawyers and "tax advisors". The government may introduce a scheme to train them in more socially useful jobs.

We would like to see the simplest of all laws used to introduce LVT - maybe something like this:

  1. Land Value Tax is a nationally applied percentage tax on the open market value of all land.
  2. Details of the freeholders of all land will be held on the Land Register.
  3. Land Value Tax will be paid by the freeholder.
  4. The Valuation Office Agency will be responsible for assessing the open market value of all land.
  5. Land Value Tax will be collected nationally and distributed to Local Authorites according to local needs.
  6. Land Value Tax will replace the following taxes: ...
  7. ...

Why are some taxes worse than others?

We are not too fond of economists (especially after their dismal failure to spot the gambling collapse of 2007/2008!) but they use a couple of terms that are worth remembering:

  • A regressive tax takes a higher percentage from those with the lowest earnings and with the lowest wealth.
  • A progressive tax takes a higher percentage from those with the highest earnings and with the highest wealth.

The huge advantage of Land Value Tax is that it is progressive, it is "fair" - those who can afford most, pay most.

What about other taxes?

  • Income Tax is progressive - the rate goes up as the income goes up. It is hard to avoid for those on PAYE but easy to avoid for those who aren't.
  • National Insurance is just a form of Income Tax in disguise but it is regressive because it has an "Upper threshold" above which the amount paid drops from 12% to 2%.
  • VAT is a regressive. Those on lowest earnings pay a higher proportion of their earnings on VAT.

    After all, there are only so many things the rich can buy and you pay no VAT if your yacht or private jet is built and parked outside the UK! VAT is also a barrier to sales - it reduces economic activity.

  • Capital Gains Tax is progressive - however, it has no relevance to the vast majority of people. There are many ways to avoid it - rollover relief is the most obvious.
  • Fuel Duty and "sin taxes" (cigarettes, alcohol, gambling) are regressive - and hard to avoid!
  • Council Tax is regressive - and probably the worse and most unfair tax of all!

    However, the American hedge fund billionaire with the £95 million house in London finds it hard to avoid paying his £1,421 in Council Tax! How much are you paying?

  • Business Rates are progressive in the sense that larger buildings, with higher rateable values, pay more.

    However, Business Rates are as bad as Council Tax and are a disincentive to business, especially to startups and small businesses.

  • Corporation Tax is a flat rate tax applied to company "profits", not to individuals. However there are thousands of ways to avoid it!
  • Inheritance Tax (let's call a spade a spade: "Death Tax") is a flat rate tax above a certain threshold. However, it is so easy to avoid it is a laugh!

What's wrong with the current system?

It isn't fair - those with the most pay the least.

The average price for a terraced house in Stoke-on-Trent is £92,391. (Source: Rightmove).

The average price for a terraced house in Westminster it is £3,232,036. (Source: Rightmove).

Now compare the Council Tax rates in Stoke-on-Trent and Westminster.

Is Westminster council far more efficient than Stoke?

No - it's simply that Stoke has far more needs to meet than Westminster.

Stoke is an early industrial revolution city, home of Wedgewood and hundreds of other potteries, but now with large amounts of run-down housing, industrial wasteland, high unemployment and poverty.

You can only afford to live in Westminster if you are rich - so you place far fewer demands on your Local Authority (LA). You also benefit from the totally disproportionate taxpayer investment in infrastructure given to London and the South East compared to the rest of the country. The more the taxpayer invests, the higher the value of the land around the new infrastructure.

Like all LAs, Stoke is legally obliged to meet its social obligations but the unfairness comes when those in Stoke, those with the least, have to meet most of the costs of those needs through Council Tax while those in Westminster, who directly or indirectly benefited from the industrial revolution, contribute the least.

In the past Westminster has been one of the most corrupt of LAs - and at one time was quite happy to export its poor to places like Stoke - anything to help the rich hang on to their money. In fact, it is still mired on controversy.

Who will be the winners and losers?

83% of homeowners will pay less. Source: Andy Wightman's report for Caroline Lucas.

Only 0.88% of homeowners will pay more than 10% above what they pay now.

The gradual introduction of LVT will enable those who have never paid tax on their land to plan for the future.

This seems fair, after all, they have managed almost 1,000 years without paying any tax on it - there will be no claim for back-tax!

Will LVT solve all our problems?

No. LVT is not a panacea.

Our taxation system, our benefits system, our funding of local government and our way of national government are a mess. They have grown up over time and have been subject to endless fiddling by special interest groups (particularly by landowners, large companies and the wealthy) - and by knee-jerk reactions to media pressure.

LVT provides a fair way to reform all property taxes and to provide revenue for local services.

LVT could go a long way beyond this - but that is not our concern at the moment - it is something that can be discussed when LVT is implemented and people can see how fair it is, how simple it is, how easy it is to collect and how impossible it is to avoid.

At one extreme some people have suggested that LVT could replace income tax, VAT, capital gains tax etc.

We don't think this would go down well at the moment - though it should be considered in detail - after we have had experience of LVT in practice. Imagine: no income tax - every penny you earn goes into your pocket!

What can be done, and what should be done, along with LVT, is to address other key ways in which our system is unfair.

We should:

  • Abolish trusts - their only purpose is to avoid tax.
  • Abolish tax havens - or at least make it an offence for UK citizens to store wealth in tax havens - directly or indirectly through companies registered in tax havens.

    Obviously those with wealth in tax havens would be given a reasonable amount of time (six months?) to repatriate their wealth and pay tax on it before any remaining wealth in tax havens is confiscated.

  • Abolish non-domicile status, and possibly dual citizenship - you are either a citizen of the UK, and therefore subject to UK taxation, or you aren't. It's a binary choice.
  • Allow those who wish to continue to avoid UK tax to surrender their passports, revoke their UK citizenship, dispose of all assets held in the UK, settle up with HMRC and apply for citizenship in any country that will have them.
  • Revise our Charity system - far too often charity status is used solely to avoid tax.
  • Consider the introduction of a "Universal Income" (or "Basic Income", or "Citizen's Income").

Will it create yet more bureaucracy?

The opposite!

LVT will be collected nationally, freeing people in Local Authorities (LAs) to help with other services that have been cut over the last few years.

LVT is much simpler than Council Tax etc. The payee (the freeholder) is known - and recorded on the Land Register. There is no need to change the payee when the occupier or tenant changes - the freeholder changes only when the land is sold.

Non-payment is handled easily - the freeholder is notified before it is recorded on the Land Register as a cumulative lean (debt with interest) against the value of the land. The lean is repaid when the property changes hands. If the value of the lean exceeds the value of the property it will be sold to recover the debt.

How is land valued and who does it?

The second part is straightforward: valuing will be done by the Valuation Office Agency (VOA).

The VOA carried out valuations for the old Rates system before Poll Tax and Council Tax were introduced to cut local taxes for the rich. Today it handles valuations for Council Tax and Business Rates.

Where necessary members of Royal Institute of Chartered Surveyors carry out local valuations on behalf of the VOA.

How land is valued is straightforward for new builds - it is the price paid for the land, with planning permission, before the development started.

The value of land depends on its permitted use and where it is.

An example

Take an example of an existing property which hasn't changed hands for the last 30 years - a six bedroom Old Rectory with a one acre garden in a small country village in the Midlands. The property was in Band F in 1993 but later additions, all with planning permission, have moved it into Band G.

Note: it was the granting of Planning Permission that increased the land value, not the bricks, mortar and labour used for the additions.

The Land Registry holds details of the last transaction on the property, and the price paid (£140,000 for the land and buildings), but things have moved on over the last 30 years!

The question for the valuer becomes:

  • "what would the land be worth on the open market if there was no building on this site but if someone was granted planning permission to build a six bedroon house on it?"

The same question could be put in two parts:

  • What would this property (land and buildings) sell for today - given where it is?
  • What would be the cost of rebuilding it if it was totally destroyed by fire?

Land Value (LV) equals Property Value (PV) minus Rebuilding Cost (RC). LV = PV - RC.

Building land changes hands all the time so valuers are very aware of land and property values based on local demand and local availability of land.

Is LVT due on empty property?

"No exceptions". LVT will be paid on all land, occupied or not.

One of the benefits of LVT is that it encourages the best use of land - and keeping property empty is not best use!

LVT is an incentive to use land, not leave it idle. Freeholders can sell land if they can' t find a use for it.

Doesn't it make Local Authorities redundant?

The argument is that if the LVT rate is set and collected nationally, Local Authorities (LAs) have no say in the matter.

This is partly true.

However, most of the services provided by LAs are the result of national legislation - even though governments have always imposed responsibilities without providing the funds to pay for them!

LAs are democratically accountable for administering these services at a local level and we would all prefer to talk to someone local about our problems rather than someone in Whitehall!

There is no doubt that the system currently used to allocate funding to LAs is grossly unfair.

Why is a child at a free school or academy worth far more (in terms of funding from national government) than one in an LA primary or "bog standard" comprehensive?

The answer is bloody mindedness - the current government is willing to throw millions of taxpayers' money (note: our money, not theirs) at "proving" that their pet schemes (out of LA control) work best - even though all the research shows this to be untrue and that direct funding leads to corruption on a huge scale. This has nothing to do with LVT - though it needs to be sorted out!

At one time it was argued that LAs get the best value for money for local taxpayers by off-loading much of their responsibilities onto private companies. The last few years have shown us enough examples (including the near bankrupty of the Conservative Northamtonshire County Council) to make this nonsense.

Private companies with large taxpayer-funded contracts can go broke (like Carillion), governments and LAs can't. Private companies make hay (profit) while the sun shines and dump the responsibilities (losses) when times get hard. As usual, taxpayers clear up the mess by paying the bill.

How much LAs should do beyond their legal responsibilities is up for discussion.

It has been suggested that LAs could levy a percentage LVT in addition to the national rate to cover the cost of specific local proposals - the income from this additional LVT would be returned directly to them. LAs would require the agreement of local taxpayers to do this, either by way of the current party political voting system or by local voting on specific proposals.

What about tenants in a block of flats?

LVT is paid by the feeholder, not by tenants.

Will landlords pass it on as rent?

Yes, landlords will certainly try to increase rent to cover the LVT.

However, LVT has to be paid whether the property is tenanted or not and it is the landlord, the freeholder, who is responsible for paying the LVT - responsibility cannot be transferred to anyone else.

Tenants are currently paying Council Tax so it seems likely that rents will go up. The question is, by how much?

Council Tax is capped at Band H: property (land and buildings) with a market value over £320,000. In areas with extremely high land values LVT will be higher than Council Tax.

Landlords will price themselves out of the market if they attempt to claw back the full LVT because, when rents reach a certain level, tenants will find it cheaper to get a mortgage and the landlord will be left with no tenants - the market will decide.

LVT will be a disincentive to being a landlord in high value areas - so, with more property on the market, house prices will fall making them more affordable to those currently renting.

What about publicly owned land?

"No exceptions." LVT will be paid on the open market value of all publicly owned land, tenanted or not.

No exceptions for land held by royalty, the military, Local Authorities etc.

It will sort itself out in the wash because Local Authorities get what they need from the income generated by LVT.

Some people say this is a bit silly - taking money with one hand and giving it back with the other. What's the point taking it from a Local Authority and then giving it back?

There are two reasons why it isn't silly:

  • It avoids exceptions - and exceptions are really bad things. They create loopholes for lawyers to worm their way into.

    The history of tax legislation shows that it is far too complex, written in favour of those who have most and riddled with loopholes to make tax avoidance relatively easy - if you can afford the right lawyer or "tax advisor".

    The more complicated it is, the easier it is to find loopholes.

    The more exceptions there are (support for the film industry for example) the easier it is to find loopholes.

  • The tax income from all land (without exception) is collected nationally but distributed according to local needs.

    Unlike statements from all previous governments this means we are all in it together - those who can afford most, pay most, those who need most, get most. Yes, there will be political arguments about "needs" - but that is a separate discussion.

What about the National Trust?

"No exceptions." The National Trust will pay LVT on the open market value of the land it owns.

The argument goes that LVT would reduce the income available to the National Trust (NT) for maintaining its properties.

We could all use that argument: all home owners need income to maintain their properties.

The NT has two types of property: inalienable and non-inalienable. Inalienable property may never be sold, it has no economic value, no market value and therefore no LVT is payable.

Some NT property, particularly farmland, generates rent from economic activity so should be subject to LVT.

There are other ways to handle things if society feels the NT should be assisted by taxpayers.

What about stately homes and country houses?

We love Chatsworth. It's a beautiful house, lovely garden, idyllic setting and fantastic estate with miles of walks - and the farm shop in nearby Pilsley is pretty good too - if pricey - £3.95 for a bottle (500ml) of beer ! The estate provides employment for over 1,000 people, it is very well run and, from the many conversations we have had, people love working there.

We are not phillistines, we don't want places like Chatsworth to be pulled down in the same way so many country houses were pulled down in the 1950s.

We say this even though the Cavendish family (via Gernon de Montfichet and Robert de Gernon) received stolen land after The Great Theft of 1066 and John Cavendish assisted William Walworth in the murder of Wat Tyler, one of the leaders of The Great Rebellion of 1381. The Cavendishes went on to suppress other revolts against the landowning class and the money for Chatsworth came from the labour of those who spent their lives digging the coal found on the land the family received as stolen goods.

These places are not "national assets" or "public resources", they are private organisations run as businesses.

  • Chatsworth is in the hands of a trust - to avoid tax.
  • Chatsworth is a charity - to avoid tax and to benefit from other tax breaks granted to charities.
  • Chatsworth is a business and should be treated as a business.
  • Chatsworth house and gardens were created by the labour of stone masons, builders, architects, plumbers, electricians, joiners, plasterers, painters, gardeners, designers, foresters, labourers etc.
  • Chatsworth's interior contains objects created by the labour of sculptors, cabinet makers, jewellers, potters, painters, dress makers, milliners, weavers etc.
  • Chatsworth was paid for by the labour of peasants, farm tenants and coal miners.
  • The Cavendishes acquired it from ancestors willing to kill to steal it and keep it.
  • The Cavendishes have contributed nothing yet they own it all.

Stately homes frequently have large amounts of land associated with them and that land generates income from farming rents. Chatsworth has 35,000 acres and the Devonshires also own the Bolton Abbey Estate in Yorkshire, Lismore Castle in Co Waterford and Compton Place in Eastbourne. In 1907 the family owned 192,322 acres across the British Isles - this had been reduced to an estimated 73,000 acres by 2001.

That land should be subject to LVT.

Quite how one would value the land under Chatsworth House itself is open to question (suggestions please). The rule for valuing land is simple: what would someone pay for the land, with no buildings on it, if it had permission to build somewhere like Chatsworth? Maybe a Russian oligarch ("oligarch" translates as "thief") could answer that question!

If stately home owners can't generate enough income to cover the LVT they are free to sell off some of their land - as aristocratic families have been doing for centuries - or to apply to the taxpayer for support. We think such support is justified but we are opposed to taxpayers' money being given away as grants to anyone, for any reason - so any support would be by the way of a loan or by taxpayers (the state) taking a share in the business.

Well run places like Chatsworth can probably stand on their own two feet as businesses even with LVT. After all, a day out for two, looking round the garden, comes to over £50 by the time you have paid for car park, entry and a sandwich for lunch.

Like many large landowners, Peregrine Andrew Morny Cavendish, 12th Duke of Devonshire, is a wealthy man - he is worth an estimated £1 billion so perhaps he doesn't need to turn to the taxpayer for a handout.

Chatsworth, like many other country estates, is already in receipt of significant public subsidies for land on which they pay no tax.

What about the capital rich but cash poor?

The English countryside is full of "estates" ranging for a few hundred acres to tens of thousands of acres. Most estate owners are "rich" in terms of the value of the land they own but this does not always translate into being "rich" in terms of cash in the bank.

Estate owners are responsible for maintaining the buildings on the estate which they rent out either with farms or to tenants wishing to live in the countryside. Most estates are now taking farms "in hand", i.e. with no long term farming tenancy, so they can upgrade the farm houses and rent them out as homes. They make far more money this way than allowing farmers to live there.

The rent generated from tenants may be insufficient to maintain the buildings, to send the landowner's children to public school and to ensure they all live in the style to which they are accustomed.

Many estates avoid taxation by putting the land into a trust, frequently registered in a tax haven.

Landowners live off the labour of others, their tenants, so they are free to take real jobs to generate additional income to cover the LVT - or they can sell off part of their land.

What about farmers?

LVT will tax land that has never been taxed before.

The phased introduction of LVT over a number of years will give time for farmers to plan.

Landowners may try to pass on LVT to tenants by increasing rents but farming is a competitive business and farmers can't make a living beyond a certain level of rent. The market will decide.

LVT can be seen as a way for society to recover the rent charged by landlords - after all, as Winston Churchill said, they do nothing to earn it!

Huge amounts of land have been, and continue to be, purchased by the cash-rich - James Dyson is now the second largest landowner in England with over 30,000 acres - mainly in Lincolnshire.

Land has lots of advantages for the cash-rich:

  • It's a hedge against any downturn in the economy - the people purchasing it are often the people directly responsible for the crash of 2008!
  • It can be passed from one generation to another without tax - especially if ownership is hidden in a trust.
  • It increases in value because it is a finite resource and other people want to bury their money in it.
  • It's a status symbol - you've made your money gambling in the City, so now you want to join the landed gentry and shoot pheasants.
  • You get taxpayer handouts from the Common Agricultural Policy. James Dyson gets £1.6 million a year - tax free!
  • There is no tax to pay on it!

Most farmers are tenants and they pay rent just as peasants in the past paid The Lord Of The Manor rent (and tithes to the church). James Dyson's tenants pay him rent.

The price of agricultural land is artificially inflated by all this speculation - LVT will almost certainly help to bring down the cost of land and discourage speculation - making it possible for genuine farmers to purchase land.

What about hill farmers, don't they need help?

There will be no exceptions to LVT, no lower rates for this or that special group.

There doesn't need to be - LVT is self-adjusting.

Hill farmers are on poorer land which has lower value than rich fenland in Lincolnshire. Lower value means lower LVT so hill farmers will automatically pay less.

Society may decide that it wants to pay certain farmers to do certain things to maintain the countryside - but that is a totally separate discussion and nothing to do with LVT.

At the moment all farmland receives a flat-rate payment from the taxpayer via the Common Agricultural Policy - even the ex-editor of the Daily Mail gets over £100,000 of taxpayers' money each year!

Society may think this is a great idea, or it may decide that paying everyone the same, irrespective of what they do to maintain the countryside, is stupid. This has nothing to do with LVT.

What about second homes and buy to let?

Locals are being priced out of the market by second homes, holiday cottages and buy to let.

LVT could be used to rectify this - LAs could, if they wished, levy an additional LVT on such properties. This would still be collected nationally but returned directly to the LA.

Why pick on the Normans?

People have always fought over the possession of land and the right to live off the labour of others through rent - so why do we pick on the Normans?

It's perfectly true that the Ango Saxons had their own social hierarchies with peasants and rural workers forced to pay for the lifestyle of their landlords. After 1066 the peasants merely found themselves paying rent to a different landlord but their lives didn't change much.

The big difference is that we are still living with the consequences. 1066 resulted in the total theft of all land in England and the gifting of that land to those who had wielded their swords in support of Guillaume Le Batard.

In the centuries after 1066 landowners frequently fought one another to a standstill for land and the right to rent. Well, some of them fought but the majority of those who died, or were crippled for life, were those who were paying the rent rather than those living off it. The "working class" has always provided canon fodder for those in search of rent - witness the growth of the "British Empire" where working class lads died to enable the rich to get richer.

Landowners used the law to entrench their position and Magna Carta was about the rights of the rich, not the rest of us. The new class of "lawyers" consisted of the sons of landowners so, not surprisingly, the law grew up to suit the needs of landowners rather than those who worked and paid the rent. Hence no tax on land!

Landowners created the English class system with the growth of the aristocracy - something reflected in the system of "titles" we still have today and in the influence of such people, "the establishment", on everything from the law to the City. It's amazing how many titled characters sit as directors of companies in the City!

Our system of public schools grew up because landowners wanted to ensure that their children mixed with people of the same class and were taught how to hold on to the reins of power. We can see that reflected today in the House of Commons, the House of Lords and the clubs of St James - including Pratts, owned by the Duke of Devonshire: "no women, no riff-raff!"

Intermarriage within the landowning class has always been a way of retaining and expanding land ownership and Tatler magazine is an excellent source of information about such pairings.

Today, in the third decade of the 21st century, large amounts of land in England (and the rest of the UK) are still in the hands of those who benefited from The Great Theft of 1066.

That's why we pick on the Normans - murdering and thieving thugs who still have a lot to answer for.

Perhaps 1066 should be seen as the first half of a match that went 1:0 to the Normans. Maybe it's time to play the second half! Time to "take back control" and "send 'em back! " (Yes, we do irony!)