What is a land value tax UK?

A land value tax (LVT) is an annual tax on the value of land itself, ignoring the buildings on it. The UK does not have one. Supporters propose it to replace council tax, business rates or stamp duty. Land cannot move or hide, and its value mostly comes from the community around it.

The idea goes back to the economist Henry George in the 1870s. He argued that land values rise because of public investment and local growth, not the owner's effort. Taxing land would capture that unearned gain. Because land supply is fixed, a land tax does not discourage building, and owners cannot avoid it by moving it abroad. It is also hard to avoid, because land is recorded and visible.

In the UK, versions have been proposed by economists, think tanks and some political parties across the spectrum. Some councils in England and the Scottish Government have studied the idea. Denmark, Estonia and some US cities use forms of land value tax. Land value duties were part of the 1909 People's Budget, but they raised little and were scrapped in 1920.

The main hurdles are practical and political. Every plot would need a regular valuation, separating land from buildings. People who are asset-rich but cash-poor, such as some pensioners and farmers, could face large bills. Changing from council tax or business rates would create winners and losers, which makes reform hard. Transitional reliefs would likely be needed.

Who it affects: Landowners, replacing council tax and business rates