PROPERTY TAX IN THE UNITED KINGDOM

Transcription

1 PROPERTY TAX IN THE UNITED KINGDOM Transaction Taxes * England & Wales * Scotland Recurring Taxes * England and Wales * Scotland Roger G. Messenger BSc FRICS FIRRV MCIArb REV Hon. CAAV MIPAV (Hons) RICS Registered Valuer Vice Chairman, TEGoVA Chairman of REV Recognition Committee Wilks Head & Eve rmessenger@wilks-head.co.uk

2 TRANSACTION TAXES 1. STAMP DUTY LAND TAX England 0-125,000 NIL then a scale up to 15% on residential more than 500,000 cumulative (additional tax on enveloped dwellings) Dwelling owned by companies m Annual Charge - 3, /2019 5m 10m - 56,500 20m+ 226, CAPITAL GAINS TAX 10 28% - land and buildings 3. INHERITANCE TAX 325,000 threshold 40% above threshold land and buildings

3 RECURRING TAXATION PROPERTY DOMESTIC Capital Value as at 1 April billion per annum ALL to Local Authorities (1/4/2003) ENGLAND SCOTLAND WALES A 40,000 27,000 44,000 B 40,001 52,000 27,001 35,000 44,001 65,000 C 52,001-68,000 35,001 45,000 65,001 91,000 D 68,001 88,000 45,000-58,000 91, ,000 E 88, ,000 58,001 80, , ,000 F 120, ,000 80, , , ,000 G 160, , , , , ,000 H 320, , , ,000; I 424,000 - D in London Borough = 1, /2019 (Southwark) COUNCIL TAX D in Edinburgh = 1,634 DISCOUNT SCHEMES D in Cardiff = 1,391 0EXEMPTIONS, ETC

4 BUSINESS RATES - NNDR England, Wales and Scotland Broadly similar system, though with some procedural differences under Scottish law in Scotland. BASIC PREMISE Tax on occupation NOT ownership So:- - Tenants - Licencees - Owner/Occupiers BASIS OF ASSESSMENT Annual rental value exclusive of VAT with tenant undertaking all usual repairs and insurance Tenancy from year to year with reasonable prospect of continuance (not 5 year rent review pattern) Tax rate p in the pound (50% of annual rental value goes to tax). Hypothetical Landlord and Tenant Vacant and to let.

5 BUSINESS RATES - NNDR 26 billion a year Until 2015, all went to Central Government service and Business Rates Retention for 2021/2 some earlier ALL to kept by Local Authorities subject to a balancing mechanism BUT Central Government funds stopped as a result. - New financial imperative on Local Authority to make sure RV List is up to date. - In England and Wales VOA in Scotland Assessor per region ADMINISTRATION Trace the tax back to 1,601 Queen Elizabeth 1 st Poor Law Reforms Huge body of case law and growing 3 Supreme Court judgements in last year WHY? - Tax rate - Complexity - Challenge

6 BUSINESS RATES - NNDR Summed up by a Hong Kong case which operates UK rating legislation In the Court of Appeal 1994 Clarion Light and Power Company Limited v- Commissioners for Rating and Valuation per L.J. Godfrey:- This Court is concerned, in these appeals, with questions of rating. The world of rating appears to be one unfamiliar with the arcana, to be cloud-cuckoo land, a world of virtual unreality from which real cuckoos are excluded (although it seems that permission to land will be granted to a cuckoo flying in from the real world if it can demonstrate that its presence in cloud-cuckoo land is essential, not merely accidental; see Darkus (VO) v- Ash Brothers and Heaton Limited 1969). A valuation for rating is based on hypothetical, not real, facts. Nevertheless, the authorities establish that such a valuation is itself to be treated as a matter of fact, impeachable only if the person responsible for the valuation itself has fallen into some error of law in arriving at it. In the absence of error of law, this court is not entitled to interfere with the valuation.

7 So how does the system work? NNDR Revaluations 1990, 1995, 2000, 2005, 2010, 2017 Antecedent valuation date 2 years before, so 2017 endorse 1 st April 2015 Next retention years move to 3 years and possibly 1 year Since 1 st April CCA Check, Challenge and Appeal 3 distinct stages:- 1. CHECK lodged following registration on HMRC portal. Ratepayer claims property and appoints agent. Agent can then lodge a check. - Factual details and MCCs. 2. CHALLENGE Formal challenge - all evidence no further evidence. VO to deliberate on that with judgement. 3. APPEAL Appeal to Valuation Tribunal Fee to be paid No new evidence. - UCLT - Court of Appeal - Supreme Court Repair Monk v- Newbiggin Assumption as to reasonable repair (economic) What is economic/desk scheme/progress/incapable of beneficial occupation? Gardiner and Theobald Expert Witness

8 EFFICIENT TAX Most Billing Authorities collecting in excess of 98% of tax due - Scope for Avoidance CIVIL PENALTIES - Empty rate is payable 3 and 6 months voids - 6 week rate - Redevelopment - Incapable of beneficial occupation - Unit of assessment - Identity of ratepayer paramount control Charities Mandatory 80% discretionary, can be up to 100% SBRR Qualifying Businesses below 12,000 RV no rates 2018/ ,000 15,000 Re-fit on a sliding scale CCA NOT a model for others cumbersome, disgruntled ratepayers natural justice poor IT platform new system

9 OTHER ISSUES - Only a bricks and mortar tax internet trading - Retail sector woes CVAs - Large number exempt - High rate poundage - Inflexible? CONCLUSION Often described as a black art as an inhabitant of cloud cuckoo land. Long may it continue!

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11 AND FINALLY. The great author, Lewis Carroll, will explain UK property tax to us on the next slide

12 U.K. PROPERTY TAX EXPLAINED!

13 U.K. PROPERTY TAX. ALICE IN WONDERLAND!

14 THANK YOU! Roger G. Messenger BSc FRICS FIRRV MCIArb REV Hon. CAAV MIPAV (Hons) RICS Registered Valuer Vice Chairman, TEGoVA Chairman of REV Recognition Committee Wilks Head & Eve