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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 6 of 19)
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practically unsaleable and that a large loss of interest has accrued.
Yet a "valuation " under the Act may show a paper increase in the
Original Site Value with resulting heavy taxation



Site Value Deductions.


The avowed intention of the advocates of the Taxation
of Land Values is to tax the unimproved value of sites of
land as distinguished from any works upon it. Whether
this object has been realised by the Finance Act, 1909-10,
is not a matter for discussion here, but in several cases
recently heard by the Referees, Increment Value Duty
has been actually claimed when the " Site Value " has
admittedly not increased at all.

In Chapter VIII. we have endeavoured to explain the
method by which Full Site Value is obtained from Gross
Value, and to make it clear that Full Site Value is the value
of the land remaining after deducting from the Gross Value
such portion of the latter as is attributable to the
existence of buildings, trees, &c.

As these two values are shown in any Provisional Valua-
tion served upon an Owner, it is clear that wherever build-
ings, &c, exist they must be taken into consideration by
the Official Valuers, whether the Owner has claimed Site
Value Deductions or not in filling up Question (v) in Form 4.
It is clear from the Act that it is not the value of the build-
ings or the cost of the buildings which ought to be deducted,
but the difference which their existence makes in the
Total Value of the land or property which has to be ascer-
tained. It is suggested, therefore, that the Owner of house
property of the ordinary kind need not trouble himself to any
great extent as to the sum put down as representing this
difference by the Official Valuers. But he must, in his own
interests, insist that the Total Value of his property and the
Original Assessable Site Value are correctly stated. If these
values are fair, such an owner need not trouble himself
unduly as to the other more or less academical " values "
shown in the Provisional Valuation. But having
regard to the Land Taxers' avowed policy of putting
all future taxation on the " unimproved " value of land,
he should still further protect himself by insisting in all
cases that fair allowances are made (in addition to the
compulsory deduction in respect of buildings), for
capital expenditure, including such items as road
making and drainage, making up of roads and presumably
of half the cost value of the site of the road on which his
property abuts. This, of course, where such works have


been executed by the owner or his predecessors in title
in developing a building estate. These deductions are
shown in the Provisional Valuation under the heading of
" Deductions from Total Value to arrive at Assessable Site
Value," and it must be borne in mind that, unless these
Deductions are claimed and obtained in settling the Pro-
visional Valuation, they cannot be afterwards claimed when
an occasion arises. If the effect of any works executed or
capital expenditure incurred is likely to remain stationary
or to decrease, no advantage would be gained as regards
Increment Value Duty ; in fact, in this latter case, the
claiming of these Site Value Deductions would be a disad-
vantage, looked at from the point of view of protection from
Increment Value Duty. If, on the other hand, their effect
is likely to grow fro rata to the increase in the value of the
land itself, they should certainly be claimed. Each case
must, however, be considered on its merits, in view of the
allowance equal to 10 per cent, on the Original Site Value
or the Site Value on the last preceding " occasion " which
is made before any taxable increment is disclosed.

Again, in the case of furely agricultural land, where
no present or potential value for building or other purposes
exists, the owner need take little notice of Form 7, but will
content himself with an examination of the Total and
Original Site Values, getting as high a Value for Agricultural
purposes as possible, regard being had to the effect of any
unduly " high " values on the future liability of the Estate
for Death Duties. (See Chapter VIII. , page 41, on Value
for Agricultural Purposes.)

Lands with Existing or Future Building Value.

It is in connection with property of this description that
the fullest consideration must be given to Site Value Deduc-
tions and their ultimate effect, and too much stress cannot
be laid upon the point that every case must be weighed
and considered upon its individual merits. No hard and
fast rules can be laid down, but attention may be directed
to the following important points : —

(1). (a) That adequate provision is made by the valuers
in deducing " Full Site Value " from " Gross
Value " in respect of the buildings and agricultural
works and (b) that in fixing the " Value for Agri-
cultural purposes " the existence of such is fully
allowed for. (See also page 42.)

(2). That where any expenditure has been made on works
which increase the value for building purposes, it is
the portion of the Total Value " attributable " to such
works, and not the actual cost, be the latter great
or small, which ought to be deducted.


(3). That the expenditure on or execution of such works
is not limited, to any period of time nor to the present

(4). That any pcbBt outlay on the redemption of Land Tax,
Fee Farm Rents or other " Fixed Charges " is a
deduction from Total to Assessable Site Value.

(5). That any gift of land to the local authorities for road
widening, or any other purpose, is to be the subject of
deduction if the result has been to increase the value
of the land under consideration for building purposes.

(6). That if the property was at any time of copyhold
tenure and has been enfranchised and converted into
freehold, the effect of enfranchisement should be
claimed as a deduction.

(7). That where the value of any land has been increased
by the removal of restrictive covenants (such as
onerous building covenants or restrictions as to
user or carrying on of certain trades) the effect of
freeing the land from such restrictions should be

(8). Goodwill or matters personal to the Owner are
subjects of deduction.

(9). " Cost of Clearing Site." This, it is suggested,
should be deducted only when the physical divest-
ment of the site of its buildings is necessary to
enable the site to be put to greater advantage than
its present uses, and to utilise its full value in the
market, but considerable doubt exists even in the
minds of the Commissioners on this point.*

Section 25 As regards items (2), (4), (5), (6), (7) and (8), the amount

s.s.4(o),(c),(r ). j y ie deduction is that "which is proved to the Commis-
sioners " ; therefore the Owner claiming any of these must
tender reasonable evidence. This point is dealt with in
the Preliminary Note to the Form of Objection to Pro-
visional Valuations in the Appendix II., page 169.
See also Notes on pages 39 and 40.

* As regards the Deductions from Gross Value to Total Value,
if should be clearly understood that they are not optional Site Valve
Deductions, but the Estimated cost of redeeming existing Fixed
Charges and the allowances to be made in respect of existing ease-
ments and restrictions, and are additions to the Total or Market Value
in order to arrive at Gross Value. See Definitions of Value, Chapter
VIII., pages 35—40.


Copyholds and Customary Freeholds.

Copyholds of Inheritance or for Life or Lives with a Right of
Renewal, and Customary Freeholds.

So far as the Valuation of Copyhold Land under Section 40.
the Finance (1909-10) Act, 1910, is concerned, these *•* 1 ( ra )< ( 6 )
inheritable or renewable Copyholds and Customary ' c '*
Freeholds are to be treated as freeholds in fee simple*
but a deduction has to be made in each case from
the Total Value of the amount which it would cost to
enfranchise them, the amount here referred to being pre-
sumably the sum payable to the lord for the release of all
his rights and estate in the copyhold or customary freehold
except his title to the Minerals. The Minerals are by
Section 23 (2) treated as a separate parcel of the land,
and the Total and Site Values of the land apart from the
Minerals should be the same whether the copyholder
purchases the Minerals or not.

The person for the time being entitled as tenant by
copy of court roll or " customary " tenure to the rents and
profits is the " owner " for the purposes of the Act, and all
references in the Act to the fee simple of any land apply in
the case of copyholds and customary freeholds to " the
whole copyhold or customary interest or estate " therein,
which words presumably include all interest and estate in
such lands except the estate and interest of the lord of the
manor. In theory, the freehold, together with all minerals
and timber, is vested in the lord, subject to the right of
the copyhold tenant or the customary freeholder to the
exclusive occupation of the land on payment of small
annual sums (quit rents), and in the case of customary
freehold and copyholds of inheritance or with right of
renewal, to their right to dispose of the same in their
lifetime or to transmit the same to their heirs or devisees,
the alienees, heirs and devisees paying and rendering the
customary fines and heriots as the case may require.

So long as the copyhold interest of inheritance or with
right or renewal or the customary interest, as the case may
be, continues to subsist, it would appear that it is only in
respect of the Minerals that the lord of the manor can be
called upon to pay any of the duties under the Act, and

s.s. 2.


in all other respects the copyholder or customary freeholder
is the " owner," " lessor," or " transferor," or other person
chargeable with duty.


Copyholds held for a Life or Lives or for Years without a Right
of Renewal.

Section 40, In these somewhat rare cases, it would seem that the

lord of the manor is for the purposes of the Act regarded as
the " owner," and the copyholder for life only is to be
regarded as holding only a leasehold interest.* From this
it follows that the lord will be liable to Reversion Duty
on the death of the copyholder or the expiration of the
term of years, and, except in the case of copyhold land held
for a long lease of which more than fifty years are unexpired,
he will be liable to the Undeveloped Land Duty in respect
of the land, and on an " occasion " he will be chargeable
with the Increment Value Duty in proportion to the value
of his interest in the copyhold. The tenant also may be
liable to a certain proportion of the Increment Value Duty.
The lord of the manor will, of course, be liable in respect
of the minerals to Mineral Rights Duty and Increment
Value Duty.

* That is to say a lessee for the term of his life. By Section
41 a lease for a life or for lives is treated as a lease for a number of
years equal to the mean expectation of life of the "life" or the
youngest of the "lives."



Rating Authorities, Governing Bodies Constituted
for Charitable Purposes, Friendly Societies and
Statutory Companies and the Crown.

These are personal exemptions of the particular Authori-
ties, Governing Bodies, Societies, Companies and the Crown
from payment of one or more of the new taxes in respect of
land while it is held by them respectively, but as the exemp-
tions apply only while the land is so held and cannot be
transmitted to purchasers, the depreciatory effect of this
taxation falls upon such Authorities, Bodies, Societies, etc.
The exemptions are not of the same scope in each case ;
taking them in detail the exemptions are as follows : —

A. — Rating Authorities.

Rating Authorities, as defined by Section 35, i.e., any Section 35.
body having power to raise a rate the proceeds of which
are applicable to public local purposes, such as County
Councils, Municipal Corporations, District Councils, Boards
of Guardians, are exempted from payment of any duty
under Part I. of the Finance Act. Their land, however,
has to be valued, and the Rating Authorities should con-
sider how the Valuation is likely to affect any purchaser
from them of any land which they may have occasion
to sell, particularly as regards " deductions," which may
affect the amount of Undeveloped Land Duty payable by
a purchaser or other person to claim under them.

B. — Governing Bodies for Charitable Purposes.

The Governing Bodies here referred to include the Section 37(1)
trustees or corporations who hold or have the management
of property for charitable purposes or for the purposes
of the naval or military forces of the Crown and also any
corporation sole and all Universities, Colleges, Schools
and any other institutions for the promotion of Literature,
Science, or Art.

Charitable purposes have been held by the Courts to
include the advancement of religion, the advancement of
science, education and learning, the relief of the poor,
and the advancement of objects of public utility. For
particulars and details the legal treatises on the subject
must be consulted.


The second sub-section of Section 37 extends the pro-
visions of Sub-section (1) to certain Joint Stock Companies
and bodies incorporated by Special Act of Parliament,
which by their constitution are precluded from dividing
any profit among the members, as if their objects were
charitable. This probably refers to certain Societies
formed under such a condition for the furtherance of some
purpose not strictly charitable, such as the study and
development of photography. As few of these bodies
own land as an investment, the exemption is of but little
practical application.

The reference to " Corporations sole " presumably was
intended to include the estates of Bishops and Glebe
Lands. As regards Glebe, the Land Union shortly after
the passing of the Finance Act, took the advice of Counsel
as to whether Glebe came within the exemption from
the periodical payment of Increment Value Duty as land
held by a corporation sole for charitable purposes. Counsel
expressed the opinion that Glebe was not primarily used
for charitable purposes and therefore was not exempt
from such periodical payment of Increment Value Duty —
but this view is not taken by all Counsel, and therefore
the question must be regarded as one of the Points at
Issue (p. 150). It will arise after the 30th April, 1914,
and will probably be tested in the Courts.

The exemptions are as follows : —

(1) As to Increment Value Duty.

As regards all land of such bodies the 37th Section Sub-
section (1) provides that Increment Value Duty shall not
be collected on any periodical occasion, that is to say,
the 15th April, 1914, and every subsequent fifteenth year
(Section 6(1)) although it is to be collected on the occasion
of the grant of a lease, or the transfer on sale. It must be
noted that the duty is simply not collected. It is not
" deemed to have been paid." The exemption is, there-
fore, of but small value. It is, in fact, a very doubtful
advantage, since it may actually bring about an increase
in the amount of Increment Value Duty payable. For
example, a Charity owns property having, say, an Original
Site Value of £1,000. In 1932, after a number of years,
during; which no duty is collected, the property is sold.
It is then found to have a Site Value of £2,000. Increment
Value Duty equal to one-fifth of the difference between
£2,000 and £1,000, less £100 (10 per cent, of £1,000)—
that is to say, one-fifth of £900 - =£180. Now suppose
that the same property had belonged to a non-charitable
corporation and that it was sold in 1932, being then found
to have the same site value of £2,000. During the period
1909 — 1932 two periodic occasions would arise, one in 1914



and the other in 1929. Let us suppose the site values
on these two occasions were £1.250 and £1,750 respectively.
The sums of Increment Value Duty payable will then be
£30 in 1914. £75 in 1929, and £15 on the " occasion "
of the sale in 1932, making an aggregate of £120 as against
£180 payable by the Charity. If simple interest at 4 per
cent, per annum on the duty paid in 1914 and 1929 is
brought into account about £30 should be added to the
£120 bringing up the burden on the non-charitable cor-
poration to £150, as against £180 payable by the Charity.

The duties payable on the three occasions work out as
follows : —

Duty deemed
to have been


of 10 p.c. of

the previous

Site Value.


1914. First Occasion : —




Site Value


Original Site Value




Deduct 10 per cent, of the

Original Site Value



20 per cent, of £150


1929. Second Occasion : —

Site Value


Original Site Value


Increment . . . . . . 750

Deduct 10 per cent, of £1,250

(the previous site value) 125


20 per cent, of £625 . . 125
Deduct duty previously paid
(£30) and duty deemed to
have been paid £20 . . 50





1932. Third^Occasion :—

Site Value 2,000

Original Site Value . . 1,000

Increment . . . . 1,000

Deduct 10 per cent, of £1 ,750

(the previous Site Value) 175


20 per cent, of £825 . . 1G5
Deduct duty previously paid

£105 and duty deemed to

have been paid £45 . . 150 . . 15

Total duty payable . . . . . . £120

The comparison would be the same with property of
private owners of the same original or increasing values
which passed twice by reason of the deaths of two of the

It should be further noticed that the Section apparently
does not relieve the Charity from the trouble and expense of
periodical valuations but only from the collection of the

(2) As to Reversion Duty and Undeveloped Land Duty.

As regards these two duties, the exemptions are confined
to land and buildings of the Charity if and so long as they
are occupied and used by the governing body for the purposes
of the Charity, such as the University, College and School
Buildings, play-grounds, hospitals, offices and museums
most of which are already " developed " by buildings,
and therefore, independently, of the exemption, are not
liable to Undeveloped Land Duty. Further, the exemption
in this case is also not capable of transmission, and as a
matter of practice will rarely be much use to the bodies
in question. It is true that it exempts school playing
fields, botanical gardens, and such-like, in the occupation
of the owners, but it does not extend to lands held as
investments which are let or leased to other persons.

The application of Section 37 as regards Reversion Duty
is not obvious. It might, however, have effect if the
Charity held an underlease from one of its own tenants.

There are no exemptions from Mineral Rights Duty or
the Increment Value in respect of Minerals.


C. — Friendly Societies.

Sub-section 2 of Section 37 extends the provisions of
Sub-section 1 (relating to charities as above set out) to
certain Friendly Societies as regards the fee simple of their
land and any interest in land held by thern. The Friendly
Societies referred to are strictly confined to those (1) who
are registered or whose rules are registered by a Eegistrar
of Friendly Societies under any Act of Parliament, and
(2) whose rules make provisions for the benefits* set out
in Section 8 Sub-section 1 of the Friendly Societies Act,
1896, and (3) when the contract between the Society
and the member is of a permanent character.

The exemptions (as in the case of Charities above men-
tioned) where the Friendly Societies come within the above
conditions cannot be of any practical value. As regards
the relief from Undeveloped Land Duty and Reversion,
such Societies do not use and occupy for the purposes of the
Society any land except an office and as regards their
investments in land the same remarks apply as in the case
of Charities.

There is nothing in this Act to exempt or in any way
relieve Building Societies or Unregistered Friendly Societies.

D. — Statutory Companies.

Companies which under any Special Act, or Provisional Section 38,
Order, are authorised to construct, work, or carry on any s.s. 1 and 4

* These benefits are : —

(a) The relief or maintenance of the members, their husbands,
wives, children, fathers, mothers, brothers or sisters, nephews,
or nieces or wards being orphans, during sickness or other
infirmity, whether bodily or mental, in old age (which shall
mean any age after 50) or in widowhood, or for the relief
or maintenance of the orphan children of members during
minority ; or

(6) insuring money to be paid on the birth of a member's child,
or on the death of a member, or for the funeral expense
of the husband, wife or child of a member or of the widow
of a deceased member, or, as respects persons of the Jewish
persuasion, for the payment of a sum of money during the
period of confined mourning ; or

(c) the relief or maintenance of the members when on travel in

search of employment, or when in distressed circumstances,
or in case of shipwreck, or loss or damage of or to boats or
nets ; or

(d) the endowment of members or nominees of members at any

age ; or

(e) the insurance against fire, to any amount not exceeding fifteen

pounds, of the tools or implements of the trade or calling

of the members ; or
Provided that a friendly society which contracts with any person
for the assurance of an annuity exceeding fifty pounds per annum,
or of a gross sum exceeding two hundred pounds, shall not be regis-
tered under The Friendly Societies Act, 1896.


railway, canal, water or other public undertaking are exempt
from payment of Increment Value Duty, Reversion Duty,
and Undeveloped Land Duty in respect of land held* for
the purposes of their undertaking, so long as it cannot be
appropriated by the Companies to any other purposes.
But this does not relieve them from payment of Increment
Value Duty when the land is sold or ceases to be held for
the purposes of the undertaking. On a sale the Company
will have to pay Increment Value Duty as from the 30th
April, 1909, but if they acquired the land after the passing
of the Finance Act then less any duty which may have
been paid on any previous " occasion."

Section 38, These statutory Companies are further relieved from

a s. 2. giving any information required by Form IV. except the

actual cost to the Company of the land which cost by
Sub-section 2 is to be "substituted for the original
site value of the land," and apparently these statutory
Companies are not required to deliver periodical accounts
in 1914 and every subsequent fifteenth year under
Section 6 Sub-sections 2 and 5, but quaere as to any
Undeveloped Land under Section 28. A question also
arises as to the cost of minerals, if purchased by the Company,
along with the surface and generally it may be said that
the substitution of the cost to the Company of the
acquisition of any land for the Original Site Value is obscure
and likely to lead to difficult questions, e.g., where the price
included the buildings ; but it is beyond the scope of this
work to discuss these points.
Section 38, On a compulsory purchase by a statutory Company the

a.s. 3. owner is not entitled to include any Increment Value Duty

which he may have to pay as part of the costs to be reim-
bursed by the Company.

E. — The Crown.

Section 10 (1) Section 10 Sub-section (1) provides that Increment Value
and (2). Duty in respect of any land or any interest in land held by

or in trust for the Crown or any Government Department
which would have been payable if the same had been held by
a private person shall not be collected and shall be deemed
to have been paid. From this it is an obvious inference that
all the land of the Crown or of any Government Department
has to be valued under the Act as on the 30th April, 1909.
Increment Value Duty being a stamp duty, this provision
was doubtless inserted to fit in with Section 3 Sub-section (1),

* By a proviso to Section 38 Sub-section (1) it is expressly declared
that land acquired by a statutory Company for tho purposes of its
undertaking which pending tho carrying out of certain works is

1 2 3 4 6 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 6 of 19)