Wednesday, 6 April 2011

Google Doc's - Residential Land Valuations

For future reference, I have set up my spreadsheet on Residential Land Valuations as a Google doc so that anybody can access (but not edit) it.

I took the average price of a semi-detached house in all the local authority areas of England, Wales and Northern Ireland from the BBC website (as at a couple of months ago) and filled in some estimated rows for Scotland.

At the bottom, (Row 391) I typed in the amount of tax revenues that would be required to replace all existing taxes that relate to wealth generally or residential land and buildings specifically* (£40 billion); the number of acres of residential land in the UK (2.1 million) and arrived at the tax rate/sq yard/year by a bit of multiplying and dividing.

So if you want to work out your LVT bill on Day One of my brave new world, you just have to look up find your local authority area (some may be missing), multiply the tax rate in the right hand column by the size of the plot on which you live, divide it by the number of dwellings on that plot if you live in a block of flats, and hey presto.

* In descending order: Council Tax less Council Tax Benefit, Stamp Duty/SDLT, the TV licence fee, Capital Gains Tax, Inheritance tax, Insurance Premium Tax, non-dom levy.

FOR CLARITY: I mean getting rid of Stamp Duty, Capital Gains Tax, Inheritance Tax and Insurance Premium Tax on everything (shares, cash, paintings, cars, whatever) not just to the extent that they relate to land and buildings. As long as we have income tax, we need CGT purely as an anti-avoidance measure to prevent people turning taxable 'income' into tax-free 'capital gains'. CGT was never intended to raise much in tax from actual capital gains (and in practice it doesn't).

25 comments:

Robin Smith said...

Nice work!

Mine comes out to about £2000/year for a 4 bed detached. Pretty close to abolishing all the land tax elements.

Not sure what you mean by "existing taxes that relate to wealth generally". No biggie though.

Can you think of a way to adopt an LVT that would offset your mortgage debt?

Mark Wadsworth said...

RS, ta. Re mortgage debt, you can invent your own tweaks.

For example: the bank pays 28% in corporation tax on the interest you pay, so to prevent double taxation, you'd get a reduction in your LVT bill of [28% x mortgage interest paid in year].

So if you have £100,000 mortgage at 4% interest, your LVT reduction would be £1,120 per year.

Something like that?

James Higham said...

Oxfordshire's pretty dear, isn't it?

Jer said...

So, my approximately 150Y2 plot in St Edmundsbury BC would cost £450 pa.

Right now then I'm subsidising some bugger to the tune of £550 pa. Come on the revolution!

Mark Wadsworth said...

JH, yes it is. Ninth decile.

Jer, yup. That's because my version has no 'poll tax' element like Council Tax (or TV licence).

Bayard said...

What is included in plot size? I assume a tennis court is, even if, like mine, it is actually a bramble patch, and a pony paddock isn't, because it's agricultural land. What about if, like me, you own a long lane from the public road to your house, is that included?

Mark Wadsworth said...

B, if it's attached to your house, you can exclude others from it and it's not actual farmland, then it's residential.

If you allow your tennis court to be overgrown, that's your decision. Your drive is tricky - but you can always ask the council to adopt it and paint a double yellow down each side.

Bayard said...

M, you can't paint mud! (well, you can, but it wouldn't last long)

Mark Wadsworth said...

B, I thought it would be, so I should have said 'put up a no parking sign'.

Scott Wright said...

One thing i've never asked you re the scrapping of other taxes. CGT do you mean only on land & property? I.E. CGT would remain for shares etc..?

Scott Wright said...

"At the bottom, (Row 391) I typed in the amount of tax revenues that would be required to replace all existing taxes that relate to wealth generally or residential land and buildings specifically"

The only problem I see with a simple swapping of taxes onto a small LVT to replace £40 billion worth is that lots and lots of "high income earners" will see a massive increase in their tax bill.

Politically, you would have to go with intended revenue collection as a higher figure & go with the welfare reform & flat taxes (25%) immediately also.

Mark Wadsworth said...

SW, it's not 'lots and lots'!

Even if you only compare it with Council Tax/TV licence/non-dom levy, you have to scroll down to the top decile to find people who would be more than £1,000 a year worse off (and that's different to losing your child benefit, because..?).

My house just scrapes into the top decile and the LVT would be about £400 more than current council tax/TV licence, whether I pay it or the landlord pays it, do you not think he'll be pretty chuffed at not having to worry about a £250,000 IHT bill when he pegs it?

Don't forget in the very high land value areas, it's mainly blocks of flats so if you're in a five storey house in Islington (£16.49/sq yd) then your effective rate is only £3.30.

Scott Wright said...

"My house just scrapes into the top decile and the LVT would be about £400 more than current council tax/TV licence, whether I pay it or the landlord pays it, do you not think he'll be pretty chuffed at not having to worry about a £250,000 IHT bill when he pegs it?"

I suppose that makes sense, their is even an immediate saving from not having to pay to set up the means to shelter from IHT.

Bayard said...

Is there some easy way of finding out the size of my plot, or do I have to get out the long tape measure?

Mark Wadsworth said...

SW, exactly. The annualised NPV of inheritance tax is about £100 - £200 per household, the same as the TV licence fee, I'm sure most people would be more relaxed about things if it was all just dealt with via LVT.

B, when this system is introduced, HMLR will merge their plot-size database with the council tax database and the system will spew out assessments. Of course, some of them will be wrong, in which case you get out your tape measure (or print off an aerial shot from Google maps and use a ruler or something) and tell them what the true size is.

Bayard said...

It's OK, I dug it out and discovered that my LVT bill would be nigh on twenty grand, which is substantially more than my entire tax bill!

sanbikinoraion said...

But then, Bayard, you do have a tennis court, a "long lane" and a paddock, which is substantially more than most people can ever hope for.

Bayard said...

S, I didn't count the paddock (agricultural land), I wish I didn't have the tennis court (which is so overgrown it wasn't even mentioned on the sale particulars and the lane is a maintenance liability. Nor do I particularly want the huge garden that came with the house, but there's not much choice around here when it comes to buying historic properties, they are not like three-bed semis.

Mark Wadsworth said...

B, if your garden is that huge then it is a simple question, is it worth twenty grand a year to live there?

If not, then sell it or ask the farmer next door whether you can give him some of your garden or apply for planning permission for another four houses.

If yes, and you can afford it, then stay there.

You know all this.

Scott Wright said...

"B, if your garden is that huge then it is a simple question, is it worth twenty grand a year to live there?

If not, then sell it or ask the farmer next door whether you can give him some of your garden or apply for planning permission for another four houses.

If yes, and you can afford it, then stay there.

You know all this."


Or if you aren't using the tennis court & paddock, section off the back end of the land & stick an access road to it & rent it for someone to do horse riding lessons?

Peter Risdon said...

Unless I've miscalculated terribly, that gives about the same as my current council tax bill - cool.

Mark Wadsworth said...

PR, I'm a low tax person. Under this modest simplification measure, some people would pay a bit more, some a bit less (TV licence will go as well) and most would pay about the same.

Bayard said...

M, to respond:

No, it's not worth twenty grand a year to live here, not for anyone given the state the house was in when I bought it, and still is to a certain extent. I suspect that I would have paid a quarter of what I did pay if Land Tax as you propose had been in force.

Who would want to buy a piece of garden miles away from their house and right next to someone else's house?

Planning permission? you must be joking. I'm in the middle of the countryside and in a National Park to boot.

The only viable option would be to have all the bits I don't use rescheduled as agricultural land, but I can't do anything about the lane and what agricultural use could you possibly have for an overgrown hard tennis court?

Mark Wadsworth said...

B, seeing as you're PM you can invent your own rules, so let's exclude the land and allow you to declare all but a few hundred yards round the house as agricultural.

With the unused tennis court, you've got to work out what's cheaper - having it torn up and reclassified or keeping it and paying the tax.

Bayard said...

M, shame on you to suggest I'd be so venal!