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The new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 online

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Online LibraryEngland) Land Union (LondonThe new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 → online text (page 2 of 19)
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days. It will, however, generally be found that before
serving an Amended Valuation the District Valuer will
endeavour to negotiate with the Owner and agree the
figures with him. It is at this stage that the Owner should
carefully consider whether he has sufficient knowledge
of a very intricate subject to enable him to meet a trained
expert on equal terms. If not, it will undoubtedly be to his
advantage to call in the aid of an experienced unofficial
valuer with a good knowledge of the Act itself, without which
knowledge the position of the valuer and client must

* As to objection to or appeal against the Value for Agricultural
purposes, see Note to Form of Objection, page 169,


resolve itself very much into one of " the blind leading
the blind."

The Owner, in all cases where the interest concerned is
an important one, cannot too carefully consider the ultimate
effect of the decision come to, and before accepting any
Provisional Valuation he should give full weight to all the
considerations which arise, not omitting future additional
possibility of taxation upon Site Value per se. Whenever
possible, it is safest to conduct the whole of the negotiations
in writing. All original Valuation Forms, &c, should be
retained and copies kept of all communications sent to the
District Valuers.

Caution to Owners.

Owners should bear in mind that many of the most
debateable points in the interpretation of very important
sections of the Act are still unsettled and await the result of
test cases before Referees and the Courts of Law.* It
appears to be the desire of the Commissioners to get as many
valuations as possible agreed to by Owners who do not take
the trouble to protect their own interests. Therefore the
Commissioners have shown no eagerness to facilitate the
legal interpretation of disputed points. While, however,
these points remain unsettled, it is clearly to the advantage
of most Owners to refrain from accepting any Provisional
Valuations off-hand. For there is a strong probability that
many of the disputed points will be decided against the
Government. Or Part I. of the Act may be repealed.

It is hard to see that anything is to be gained by being
in any hurry to conclude a settlement. And if these
considerations ought to weigh heavily with the minds of
absolute owners, still more should they be remembered
by Trustees, Executors, Solicitors and Surveyors, acting
for other parties. The position of those acting in any
of these representative capacities is very delicate and
difficult in view of the dangerous pitfalls which lurk in the
Finance Act.

Appeal to Referee and the Courts.

If the Owner and the District Valuer are unable to
come to terms, the Commissioners will then formally
decline to amend (or as the case may be still further amend)
their valuation, in which event the Owner can appeal
to a Referee (appointed by a panel consisting of the Lord
Chancellor, the Master of the Rolls, and the President
of the Surveyors' Institution). The decision of the Referee

* See " Points at issue," page 150.


will be subject to the Owner's and the Commissioners'* right
of further appeal to the High Court, or to the County-
Court where the " Total Value," or the " Site Value '"
as estimated by the Commissioners, does not exceed
£500. In the latter case also there is a right of further appeal
to the Court of Appeal.

Rules for procedure in cases of appeal have been drawn
up by the Reference Committee under the Act. These are
necessarily somewhat technical and complicated, and in all
cases where an Owner decides to appeal to a Referee and
thence if necessary to the Courts, legal advice should be
taken so that he may not prejudice his case, or be non-
suited on account of any mistake or omission in procedure.

As to the time for giving Notice of Appeal to a Referee, see
Rules 4 and 5 of Land Values (Referee) Rules, 1910. (See
Appendix, page 131, and note on Form of Objection,
page 169.)

The costs of any " Reference " are to be in the discretion
of the Referee, and he may order them to be paid by the
Commissioners or vice versa.

Right' of Persons " Interested " to Object and Appeal.

" Any person interested in the land not being an owner " Section 27,
may apply for a copy of the Provisional Valuation, and shall, s - s - 5 and '•
provided the Provisional Valuation has not then been finally
settled, have a right to object and appeal against it, whether
he is the Owner within the meaning of the Act or not.
It is generally considered that for the purposes of Section
27, Sub-section 5, a mortgagee is a " person interested
in the land," notwithstanding the definition of an " interest "
in Section 41 ; otherwise the subsequent words, " not
being an owner," would have no meaning. Where a Lessee
has a term of at least fifty years unexpired, and is therefore
given the status of an " Owner " under the Act (Section 41),
he, as well as the Reversioner, must be served with a
Provisional Valuation.

♦Section 7 of the Revenue Act, 1911, gives the Com'
missioners the same power of Appeal against the decision of a Referee
as was conferred by Section 33 (4) of the original Act on the " owner "
or " person interested " in the land.


Increment Value Duty.

This is ostensibly* a tax of 20 per cent, on any increase of
value (not created by the Owner) which accrues (after the
30th April, 1909) to the value of the site of anjr land (whether
built on or not) over and above the Original Site Value.
(See, however, as to deductions and allowances on Assess-
ment of Duty.)

When chargeable.

Increment Value Duty becomes payable on the following

(1) On the Transfer or Sale of the Fee Simplef (" free-

hold ") of any " Land " (which expression includes
houses and all other kinds of structures upon it and
all minerals on, in or under the surface of the land) or
of any " Interest " in Land (which includes a Leasehold
Interest, created for a term of more than fourteen
years but not a mortgage or an incorporeal
hereditament such as Sporting Rights).

(2) On the Death of the Owner.

(3) On the Granting of a Lease or an Underlease^ for

more than 14 years.

* In preparing this Handbook, the Land Union has relied upon
the statements made by the Chancellor of the Exchequer and the
Attorney- General in the House of Commons on the introduction of
and during the Debates on the Bill to the effect that this Duty is a
tax on increases in the value of "the land itself apart from buildings
and other improvements, and of this difference the strictly unearned
increment" the Government propose to take one-fifth. (See "Tho
People's Budget, explained by the Right. Hon. D. Lloyd-George."
Hodder and Stoughton, London, page 50.) However, under the
methods of arriving at Site Value on " the occasion " as
adopted by the Commissioners in recent cases, the tax would
appear to be more in the nature of a tax on occasional profits
made by vendors of house property, Duty being claimed where
there has admittedly been no actual increase in the value of the
site. (See Note on the Government's mode of Assessing Increment
Value Duty in the Appendix, page 150.)

f Tho Act in fact distinguishes between the sale of the fee
simple in possession not subject to a lease, and the sale of the
fee simple subject to a lease. The latter is really an ''interest" in

± Under Section 41 " Lease " includes an Underlease.


(4) Where Land is owned by any Body Corporate or
Unincorporated and does not in consequence become
liable to Death Duties, Increment Value Duty
becomes payable upon a Revaluation in 1914 and in
every subsequent fifteenth year, in addition to
" Occasions " (1) and (3).

Exemptions and their Effect.

There are certain Exemptions designed to relieve
occupying Owners and the possessors of agricultural land,
parks, &c, from the payment, of Increment Value Duty.
But opponents of the new Land Taxes, including well-known
writers of Economics, declare that most if not all of the
Exemptions from the operation of the Land Taxation Clauses
of the " People's Budget " are only partial, temporary or
personal to existing Owners, and not being transmissible,
the taxes, or some of them, do in reality fall on all land
and property, whether " exempt " under the Act or not.
It is not intended to enter here upon any discussion of
this vexed question, but merely to point out the
indisputable fact that the imposition of any new form
of taxation on any particular kind of investment
must have the effect of deteriorating that investment
by the capitalised value of such additional burden.
So long as the liability to taxation, whether
present, or on some future occasion, or under different
circumstances, exists — such liability is a factor which the
prudent investor must take into account, when deciding
the form of investment he will adopt in putting out his
savings to interest.

Conditional Exemption of Agricultural Land.

Agricultural Land is exempt from Increment Value Duty
so long as it has no value higher than its market value for bectl0n 7
agricultural purposes, but if it has or acquires any value over
and above its agricultural value, then Increment Value Duty
becomes payable on any of the " occasions " mentioned
above. The Duty is levied not on the difference
between its then value for agriculture and its then value
for any other purpose — but on the difference between its
original " Assessable Site Value " and its then Site Value
as ascertained under Section 2 of the Act.

It would appear therefore, that notwithstanding that
the land may have greatly increased in value for
agricultural purposes since April 3Uth, 1909, Increment
Value Duty will be payable on the differences in
Site Value if on the occasion of transfer, the re-valuation
reveals the existence of any value in excess of its agricultural

* See the definition of this word on page x.


value, e.g., if the provisional valuation shows the Site Value
to be £100 and the value for agricultural purposes £120,
no duty would be payable if these figures are comparatively
the same on the " occasion." But if the valuation on the
" occasion " disclosed a reversal of this position so that
the Site Value exceeded the Agricultural Value then duty
would be payable on the difference between the Site Value
as on 30th April, 1909, and the Site Value on the " occasion."

The value for Sporting purposes should be treated as
part of the Agricultural Value unless it exceeds such value.

For definition of value for agricultural purposes and
sporting rights respectively and notes thereon, see page 41.

Conditional Exemption of Occupying Owners of Small Houses.
Section 8, Jt Jg clear from g ection g (l) f the Act that some small

Occupying Owners* escape the direct imposition of the
Increment Value Duty provided the exempting conditions
prevail on the " occasion " when duty would otherwise be
payable. No tax is payable when the Annual Value for
Income Tax purposes is : —

£40 or under in London.

£26 or under in Boroughs or Urban Districts having
a population of fifty thousand or upwards.

£16 elsewhere.

The exemption is, however, subject to this important
condition : that the Owner shall have been the Occupying
Owner for a period of not less than twelve months prior to the
" occasion " on which the Duty otherwise became payable.
It is to be noted also that the Annual Values mentioned
are the full Rack Rental Values without any allowances
for repairs, &c.

And if the purchaser of a property from the Occupying
Owner is not going to be also an Occupying Owner himself,
the property in his hands will become liable to duty, and
he is scarcely likely to pay the same price for it as he would
have before the Act. Thus the " exemption " is somewhat

The exemption limits of value may have some curious
results, e.g., supposing a man buys a house in a
" lodging-house " district in London of, say, £40 annual
value and £600 capital value, so long as he resides in a
portion of it, and pays the rates, he is the " occupying
owner " and escapes the Increment Value Duty on sale
at a profit, while the man who invests £600 in the purchase
of three cottages has to pay the Duty in respect of the
two he cannot occupy himself.

* By Sub-section 4 " Ov, nor " here includes the holder of a lease
originally granted for a term of 50 years or more, but it does not
effect the Increment Value Duty payable by the Reversioner.


Conditional Exemption of Small Agricultural Holdings.

Where the area of agricultural land occupied and culti- Section 8.
vated by the Owner does not, together with other land 8 - s - 2 -
belonging to him, exceed 50 acres in all, and the average
Total Value does not exceed £75 per acre, no Increment
Value Duty is payable. It must, however, be noted that
this exemption does not apply to any land occupied with
a house the annual value of which house for Income Tax
purposes exceeds £30.

Where the house and the lands are assessed together,
the Commissioners shall make the necessary apportionment.
The expression " Site of a Dwelling House " includes any
offices, courts and yards occupied therewith and gardens
not exceeding one acre in extent.

Exemption of Lands used for Games.
Land used for Games or for the purposes of Recreation, Section 9.
when held by a Body Corporate or Unincorporate, without a
view to the making of profit, is exempt on any periodical
occasion' from the payment of Increment Value Duty if
the agreement, or lease, as originally made, could not be
determined for five years at least. The same conditions
apply if the land is let under circumstances which render it
probable that the land will continue to be so used. In
this case the payment of the Duty is only postponed. The
land is not exonerated from liability.

Exemption of Flats and Tenements.
Leases of these are exempt, but the site of the entire Section 11.
building in which they are situate is taxable.

Personal Exemptions.
For the exemptions applying to Rating Authorities,
Friendly Societies, Charities, Railway and other Statutory
Companies, see Chapter XL

Leaseholds Liable to Increment Value Duty.
It is important to note that although Increment Value Section 2,
Duty is ostensibly a Tax on any increase in the " Site s.s.^2, and
Value," Leaseholders are liable to payment on any of the
" occasions " previously mentioned, according to the
extent of their interest in the property — whether it is sold,
leased, or passes on their death. And as where the Lease
has any considerable term unexpired, the greater part
of any " increment " must accrue to the Leaseholder,
it seems only fair that he should, as no doubt in practice
he will, have to bear the greater part of the burden of
Increment Duty — the Freeholder or Reversioner being
charged with Reversion Duty on the idtimate falling in
of the lease or with Increment Value Duty on the sale or
re-leasing of the property.

Section 4
s.s. 1.


Who Pays the Duty.

The liability in all cases of transfer or sale or grant of a
lease is upon the Transferor or Lessor (see Section 4, s.s.l).

Under the original Act, it was possible for the Vendor
or Lessor, on the sale or leasing of his property, to stipulate
for the payment of any Increment Value Duty arising out
of the transaction by the purchaser or lessee, and advantage
was taken of this to throw the burden upon the latter,
notably on the sale of a portion of the well-known Beau-
champ estates.

Section 1 of the Revenue Act, 1911, made any
contract giving effect to this arrangement null and void,
so that, so far as is legally possible, provision has now
been made to prevent the shifting of the burden — including
any expenses connected with the assessment or payment
of the duty — on to the shoulder of the purchaser or tenant ;
but nothing of course can prevent the parties to the trans-
action so arranging the purchase money or consideration
that the burden shall in reality fall upon the purchaser or
lessee. That is, supposing he is willing to pay the extra
sum over and above the full market price, to secure the
property. In general, however, the tax falls upon the
selling Owner. As to the desirability of taking a covenant
by the transferor or Lessor to have the duty assessed and
produce the assessment, see page 15.

Set Off and Allowances for sums 'paid for Reversion Duty and

Under Section 14, Sub-section 4, Reversion Duty paid on
a benefit which is identical with the Increment Value may
be treated as payment on account of Increment Value Duty,
and vice versa.

Under Section 36 any capital sum paid to a Rating
Authority in respect of betterment due to improvements
made by the authority may be deducted from the Increment
Value for the purposes of assessing the Increment Value
Duty, and the Duty on the amount deducted shall be treated
as paid.

Assessment and Apportionment of Increment Value Duly.

The provisions of the Act which determine the amount of
Increment Value Duty accruing on the first and subsequent
" occasions " are Section 1, which imposes a duty of twenty
per cent, or strictly £1 for every complete £5 of increment of
the site value on the " occasion " over the original site value
of the 30th April, 1909, so far as it has not been paid on a


previous occasion ; Section 3, Sub-section (1), which in
effect declares that on each " occasion " the Increment Value
Duty then to be deemed unsatisfied shall be such an amount
as the Commissioners determine,* after giving credit for
the duty paid on previous occasions and authorises the
Commissioners for this purpose to apportion or re-apportion
duty paid on previous occasions. The wording is not very
clear, but the scheme seems to be that on each occasion
the Commissioners in the first place have to take the difference
between the Site Value on the " occasion " and the Original
Site Value on the 30th April, 1909, as the basis, and from it
deduct on the first " occasion " happening after the passing
of the Act (29th April, 1910) 10 per cent, of the Original
Site Value and on any subsequent " occasion "10 per cent,
of the Site Value on the last preceding occasion, j From
this residue the gross Increment Value Duty is calculated
at the rate of £1 for every completed £5 of this residue, and
the duty then deemed to be unsatisfied is arrived at by
deducting from the gross Duty all duty paid or assessed^
on previous occasions and also presumably all sums
remitted and deemed to have been paid, e.g., under Section 8 (5).
Section 10, Section 14 (4), Section 4 (4), or Section 36. This
gives the duty deemed to be unsatisfied on the occasion.
The next point to be considered is by whom and in what pro-
portions is the unsatisfied duty to be paid. This is regulated
by Section 3, Sub-sections (2) and (3). Where the occasion
is the transfer on sale or the devolution on death of the fee
simple in possession of the land, the whole of the unsatisfied
duty is payable by the transferor or the estate of the deceased
as the case may be. Further, the whole of the unsatisfied
duty is also payable on a periodical occasion by a Body
Corporate or TJnincorporate in respect of any land held by
such body in fee simple in possession, but where the
" occasion '"' is the grant of a lease or of an underlease or
the transfer or devolution on death of any interest in
land or as regards a Body Corporate or Unincorporate in
respect of an interest in land is one of the periodic occasions
then " such proportionate part of the duty is to be collected
as may be determined by the Commissioners to be payable
in respect of the interest in land created, transferred, passing

* Subject to the right of appeal under Section 33.

t The aggregate remission of ten per cent, during any period
of five years is by the proviso in Sub-section 5 of Section
3 restricted to twenty-five per cent, of the Site Value on
the last "occasion" occurring before the commencement of the
five years, and if no such occasion, then to twenty-five per cent, of
the Original Site Value.

J As to the importance to a Purchaser or Lessee of seeing
that the duty payable by his Vendor or Lessor is "assessed," see
page 15.


on death or held," as the case may be, in accordance with
rides made by the Commissioners for the purpose.

It will be observed that Sub-section (2) is silent as to
the payment of the balance of the duty. It may therefore
be that the intention of the legislature was that such
balance should not be collected on the particular occasion,
but not having been paid, there would be less to deduct
on the next occasion.

Rules (see Appendix, page 136) have been made by the
Commissioners under Sections 3 and 93 of the Act for the
purpose of defining the proportion of the unsatisfied
duty to be paid on the granting of a lease or transfer,
devolution on death of an interest in land or other occasions
relating to an interest in land. Any person aggrieved
has under Section 33 a right of appeal against any apportion-
ment of the duty.*

Under Section 3, Sub-section 1, and Section 29, the
Commissioners have powers of apportioning and re-appor-
tioning any Original Site Values and any duties paid on
previous occasions for the purpose of assessing any duty
under Part I. of the Act on or in respect of any piece of land,
whether under separate occupation or not, and all the pro-
visions relating to the procedure or valuation of land are by
Sub-section 3 of Section 29 applied to the apportionment
or re-apportionment of Site Values so that presumably
the Commissioners have to serve provisional apportionments
which are open to objection and appeal on the part of the
owners in the same way as Provisional Valuations.

Increment Value Duty, a Stamp Duty.

Increment Value Duty when assessed under Section 4 is
a debt due to the Crown (Sub-section 4), nevertheless, as
regards the mode of payment, it is by Section 3, Sub-section
6, made a " stamp duty " — this means that it is collected
primarily by means of a stamp on the deeds which effect
a sale or lease or the accounts which have to be delivered
on a death or periodic occasion. (See Sections 5 and 6.)

As regards deeds, it is important that all purchasers
and lessees should see that the conveyance, lease, or other
document (as the case may be) is stamped in accordance
with one of the three kinds of stamps mentioned in Section
4, Sub-section 3, denoting

(a) that the Increment Value Duty has been paid ; or

* It is provided by Sub-section 4 of Section 3 that in the case of
the death of a tenant lor life of settled property, if such property
is the fee simple in possession of the land (see definition in Section
41) then the whole of the unsatisfied duty shall be collected on the
death, but if the settled property is "an interest in land" (see
Section 41) the Increment Value Duty is to be collected as if that
interest passed on the death.


(b) that all particulars required by the Commissioners

for the purpose of assessing the duty have been
furnished, and security for payment thereof has
been given ; or

(c) that no duty was payable on the " occasion."

If so stamped, the deed will be treated as duly stamped,
which means that it can be freely produced in evidence in
legal proceedings so far as the requirements of the Stamp
Act are concerned, but it is submitted that if the deed bears
only the B stamp it will not relieve the transferee or lessee
from liability on the next occasion to account for duty
not paid but which ought to have been paid by his transferor
or lessor and other predecessors. (Compare Sections 3(1)
and 4 (4).) It would seem prudent therefore that when
the deed is stamped with the stamp B (Particulars delivered)
the transferee or lessee should take a covenant from his
Transferor or Lessor to pay the Duty payable by the latter
as soon as possible or at least to produce the assessment.




Undeveloped Land Duty.

Section 1G,
s.s. 1.

Section 16,

8.3. 2.

Section 16 (3).

This is an Annual Tax of one-halfpenny in the pound on
the Assessable Site Value of all " Undeveloped " Land,
whether in actual demand for building purposes or not,
subject to the exceptions noticed below. (See page 18.)
This, of course, is a tax upon capital.

Land is deemed to be " Undeveloped " when it has not

2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Online LibraryEngland) Land Union (LondonThe new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 → online text (page 2 of 19)