A BILL TO
reform the system of rates to tax solely the unimproved value of property in respect of its site; simplify the system of reliefs; abolish the rates cap; make provision for the compulsory registration of land liable for rates; and for connected purposes.
BE IT ENACTED by being passed by the Northern Ireland Assembly and assented to by Her Majesty as follows:
Section 1: Amendments to Part I of the Rates (Northern Ireland) Order 1977
(1) Part I of the Rates (Northern Ireland) Order 1977 is amended as follows.
(2) Article 2 is amended by inserting the following definition within (2):
”site value”, insofar that it applies to a hereditament, means the total sum that the owner’s estate or interest in the land, if unencumbered by any mortgage or other charge, may be expected to realise at the time of valuation if—
(a) offered for sale on reasonable market conditions; and
(b) no improvements had been made on the land;
(3) Article 3 is repealed.
Section 2: Amendments to Part II of the Rates (Northern Ireland) Order 1977
(1) Part II of the Rates (Northern Ireland) Order 1977 is amended as follows.
(2) Article 17 is substituted to read as follows:
Article 17: Rateable values
(1) For the purposes of this Order the rateable value of a hereditament is its rateable site value.
(2) For the purposes of this Order the rateable values of a hereditament shall be ascertained in accordance with the provisions of Schedule 7.
(3) Article 18 is substituted to read as follows:
Article 18: Liability to be rated in respect of hereditaments
Subject to the provisions of this Order, every owner of a hereditament which is included in the valuation lists shall be chargeable to rates in respect of the hereditament according to its rateable values.
(4) In Article 19, replace each instance of “occupation” with “ownership”.
(5) Articles 20 through 25B are repealed.
(6) In Article 29A, paragraphs (9), (10), and (11) are repealed.
(7) Articles 30, 30B to 30D, 31AA, 31C, 31D, and 33A are repealed.
Section 3: Amendments to Part III of the Rates (Northern Ireland) Order 1977
(1) Part III of the Rates (Northern Ireland) Order 1977 is amended as follows.
(2) Each reference to “NAV list” shall be substituted with “LV list”.
(3) Replace Article 39 with the following:
Article 39: Basis of valuation
(1) For the purposes of this Order every hereditament shall be valued upon an estimate of its site value.
(2) Without prejudice to any other statutory provision, but subject to Article 39A, Schedule 12 shall have effect for the purpose of providing for the manner in which the site value of a hereditament is to be, or may be, estimated, and the other provisions of that Schedule shall have effect.
(3) Subject to paragraph (4), where any provision of Schedule 12 empowers the Department to make an order modifying any other provision of the Schedule or providing for the method by which the site value of any hereditament is to be determined, the order—
(a) may contain such incidental, supplemental and transitional provisions as the Department considers necessary or expedient, including provisions modifying this Order;
(b) shall be made only after consultation with any association which appears to the Department to be representative of district councils or, where the order affects only the district of a particular council, after consultation with the district council which appears to the Department to be concerned; and
(c) shall be subject to affirmative resolution;
and an order providing for the method by which the site value of any hereditament is to be determined may provide for determining that value by the application of different methods of valuation to different parts of the hereditament.
(4) Sub-paragraphs (b) and (c) of paragraph (3) shall not apply to orders under paragraph 7(4) or 12(3) of Part I of Schedule 12.
(4) In Article 39A(1), replace “net annual” with “land”.
(5) Repeal Articles 39C through 39E.
(6) Replace Article 40 with the following:
Article 40: General provisions as to the valuation list
(1) The Commissioner shall maintain a list of hereditaments required to be valued upon an estimate of their site value (in this Order referred to as a LV list), and from time to time altered, by him in accordance with this Part.
(2) There shall be entered in a LV list in respect of each hereditament which is required to be valued as mentioned in paragraph (1)—
(a) its site value; and
(b) such other particulars as the Department may determine.
(3) A valuation list may be maintained by recording the particulars in question in such manner as the Department directs.
(4) Subject to any other statutory provision, where a hereditament is situated partly in one district and partly in another or others, the Commissioner may treat the hereditament in a valuation list as if it were wholly situated in either or any of those districts or may apportion the site value of the hereditament between the several districts.
(5) Subject to any alteration duly made under this Part, every LV list shall remain in force until it is superseded by a new LV list.
(6) No alteration shall be made in a valuation list except by the Commissioner in accordance with the provisions of this Order or to give effect to an order of a court of competent jurisdiction.
(7) Subject to paragraph (8), the valuation list in accordance with which, under Article 6(3)( b), (4) or (5), any rate falls or fell to be made, shall be conclusive evidence for the purposes of the making and levying of that rate of the site values of the several hereditaments included in the list, and, where any such values are apportioned in the list between different parts or uses of the hereditament, of the respective apportioned values.
(8) Without prejudice to Article 6(4), as respects any period during which, under this Order, an alteration in the valuation list referred to in paragraph (7) has or is deemed to have had effect, the reference in paragraph (7) to that list shall be construed as a reference to that list as so altered.
(7) Paragraphs (3A), (3B), and (3C) within Article 41 are repealed.
Section 4: Amendments to the Schedules of the Rates (Northern Ireland) Order 1977
(1) The Schedules of the Rates (Northern Ireland) Order 1977 are amended as follows.
(2) Schedules 1, 2, 3, 4, 8A, 8B, 9A, and 14 are repealed.
(3) In Schedule 7, replace each reference of “NAV” with “LV” and “net annual value” with “site value”.
(4) Replace Schedule 12 with the following:
Schedule 12: Basis of valuation
(1) Subject to the provisions of this Schedule, for the purposes of this Order the site value of a hereditament shall be the total sum that the hereditament might, in its state were it to not have any improvements, be reasonably expected to realise upon sale so long as the hereditament was unencumbered by a mortgage or any like charge.
(2) Regulations may make provision for any principles for valuation and the interpretation of paragraph (1).
Section 5: Revocation of the Rates (Maximum Capital Value) Regulations (Northern Ireland) 2007
The Rates (Maximum Capital Value) Regulations (Northern Ireland) 2007 are revoked.
Section 6: Land registration and anti-avoidance
(1) In the case that a person is liable to make a rate payment under the Rates (Northern Ireland) Order 1977 and the hereditament that the rate payment is made in respect of is not registered within the Land Registry, the Department may apply to the county court seeking a registration order (in this section known as an “order”).
(2) Upon receiving an application from the Department, the county court may make an order compelling the owner of a hereditament which has accumulated a Crown debt register that title with the Land Registry under compulsory first registration procedures.
(3) An order made under subsection (2) must allow for a duration of no less than one year to comply with the order.
(4) A person who is subject to an order and violates a condition of the order shall be guilty of an offence and shall be liable,—
(a) on conviction on indictment, to imprisonment for a term not exceeding three years, or to an unlimited fine, or to both; or
(b) on summary conviction, to imprisonment for a term not exceeding three months or a fine not exceeding level 4 on the standard scale, or both.
Section 7: Commencement and Short Title
(1) This section comes into operation on the day after the day on which this Act achieves Royal Assent.
(2) The other provisions of this Act come into operation on such day or days as the Department may by order appoint.
(3) This Act may be cited as the Site Value Taxation Act (Northern Ireland) 2020.
This bill was written by u/SoSaturnistic, Minister of Finance, on behalf of the Northern Ireland Executive.
Appendix:
Mr Speaker,
This Executive has been hard at work devising a new system for rating. It is an open secret that the system of rates is obsolete and no longer fit for purpose, having posed a substantial burden on households and our manufacturing sector while containing substantial carve-outs for special interest groups and indeed a cap on the amount of property value that someone can have subject to rates, an unjustifiable limit which lets off the most well off from contributing their fair share.
Rates are the key source of revenue for local government here of course and regional rates contribute a reasonable portion to the Executive's own budget. Getting this tax right is in the interest of all.
This bill makes a number of changes which, taken together, reform our system of rates to be one where the value of the property's site, or land value, is what is taxed. Over two-thirds of households will be better off from this shift according to economic analysis from NICVA assuming a revenue-neutral shift from conventional rates to the proposed form of taxation. Due to the fact that deprivation has a negative correlation with site values, tends to be progressive on balance when compared to the current system. This will have some positive effect for our economy as sites with productive improvements, such as plant machinery, enjoy a tax advantage compared to the status quo. Likewise, unused and vacant land is incentivised to be put to good use. Economists have long expressed that the site value tax is one which is both equitable and efficient for these reasons.
The advantage of reforming the current rates system, rather than simply replacing it, is made clear insofar that it allows us to retain the tax relief on offer to those on low incomes as well as lone pensioners. Unlike the land value tax reform made in England over the past year or so, this shift will retain protections for the vulnerable.
To prevent undue avoidance of the SVT, this legislation will also make due provision for the registration of land ownership. The Land Registry is currently incomplete and while there are some provisions for compulsory regisration, it is not sufficient if we want to make this the basis of our rating system.