How will the new tax hit me?

What is a land value tax?

The land value tax (LVT) – dubbed garden tax by critics – allows the Government to tax all land. It is usually seen as an alternative to council tax, which is based on bricks and mortar property value without including any associated land. LVT would affect regular householders and other landowners such as farmers, sporting estate owners and speculators buying up unused land and waiting for its value to rise.

Why does the Scottish Government want to introduce it?

The SNP is determined to make better use of Scotland’s land. Some 432 individuals own half the private land in rural Scotland. The Government has stated it wants to force one million acres into public hands so it be can be farmed, built on or put to other use. This tax would make some land too expensive, forcing people to sell, but it would also hit homeowners.

So what does it mean for me?

Depending on the combined value of your home and garden, your annual tax bill could soar. Scottish Green MSP Andy Wightman, who supports the tax, suggests some homes in the highest council tax bands would see their annual bill more than double if LVT replaced council tax. Council house tenants and private renters would be spared initially, but could see their rent rise as landlords look to cover costs. Pensioners would be particularly hard hit as this is a tax on wealth and assets, taking no account of income or savings.

How is it calculated?

Council tax bands homes according to their value as property, and each band pays a certain rate. Land value tax is based on the value of the land, with people paying a percentage of either the sale or rental value. A house might be worth £250,000, with the land it stands on valued at £125,000 – the value used to calculate tax. A 1 per cent tax rate would mean an annual bill of £1,250 annually, higher than many Band D council tax bills, while the 3 per cent favoured by some LVT supporters hike the bill to £3,750.

What will happen next?

The Scottish Land Commission quango will look at the merits of the tax along with other ways of accelerating land reform. It is due to report by the end of 2018-19. If it backs a new tax that could be presented in a Bill to the Scottish parliament, or more likely be included in party manifestos ahead of the next Holyrood election in 2021. However, with the Scottish Greens and UK Labour having already indicated a degree of support, it is possible the tax could gain cross-party support.

So, will this new tax ever see the light of day?

It is some way off. The land commission review still has 18 months to run, but the proposal is likely to win the support of Left-wing parties and would be a powerful weapon in the Scottish Government’s war on big landowners. It would be deeply controversial, particularly for anyone facing substantially higher bills.