Scottish Land & Estates

estate Taxing land better could help Scotland’s economic recovery

Increasing the role land plays in Scotland’s tax base and a local authority power targeted at newly derelict property are among the key recommendations put to Government Ministers in today’s report on how Scotland’s land could be taxed better.

The Scottish Land Commission was tasked with advising on how changes to existing land and property taxation could support Scotland’s economic recovery and land reform objectives.

The Commission’s recommendations make the case for ongoing reform to improve the way in which Scotland taxes land, outlining the steps needed to increase the role of land values in the nation’s tax base and support the delivery of the Scottish Government’s land policies.

While 50% of the UK’s wealth is tied up in land and property, it only forms around 10% of the total tax base. In Scotland, just 12% of all public sector revenue across reserved and devolved taxes are raised through taxes fully or partially levied on land and property.

Identifying changes to the tax system could help regenerate town centres, ensure that the move to net zero is a just transition, deliver wider benefits for local communities, and support a more diverse pattern of land ownership.

The recommendations include making information on land ownership, value and use publicly available through the introduction of a cadastral map approach – which is widely adopted across Europe and maps all land data. This would be a vital first step in strengthening the role of land in Scotland’s tax base.

The report also identifies tax as playing a key role in tackling vacant and derelict land and supporting town centre regeneration. Recommending the incentivisation of the reuse of sites by introducing additional reliefs on Non Domestic Rates (NDR) and council tax for new build properties on longstanding vacant sites and giving local authorities new powers to apply NDR to newly derelict properties to discourage them from falling into disrepair.

On the hot topic of ‘natural capital’ and the emerging carbon market, the Commission recommends that particular attention should be given to how taxation can secure “a productive balance of public and private benefit from future carbon values”. It also recommends specific consideration of the role of Land and Buildings Transaction Tax, suggesting changes could help support more diverse land ownership and address the risks to a just transition of high land values associated with carbon.

Offering income tax relief to encourage more letting of agricultural land is a final recommendation – which would require engagement on a UK basis to secure changes to what is a reserved power.

Scottish Land Commission Chief Executive, Hamish Trench, said:

“Land is our most valuable asset and Scotland has scope to tax land in ways that better support the Scottish Government’s policy priorities, but this needs to be considered in a careful way that acknowledges

Move beyond tribalism

By Stephen Young, Head of Policy at Scottish Land & Estates

Tribalism is all too common, not least in the world of football and politics. The idea that you pick a side, back them unconditionally, shout loudly and disregard any other viewpoints appears to work in some circumstances. However, when it comes to rural Scotland it is completely counterproductive.

Whether it is sheep versus trees, holiday accommodation versus long term housing or even differing soil management techniques, there is a feeling that we appear to be entering into tribal territory. The reality is it is rarely black and white and as with everything, there needs to be balance. The role of land management in Scotland’s economy and combatting climate change cannot be underestimated, and there are challenges around how it is best used.

SLE has been calling for greater integration of thinking around differing land uses for a long time, arguing for the need to ensure that policies are not competing with each other but instead offer genuine options for land managers to select the use which is best suited to achieve beneficial outcomes on all levels. We don’t see that there is any need for conflict between land uses: we should have the ability to meet planting targets, while still maintaining output from agriculture, by using the land best suited for each

activity. That doesn’t mean large monocultures of each in different areas either. It will, however, involve grown up discussions, taking the conflict out of the debate and spending less energy creating heat and more creating light. There is a similar debate going on around rewilding, initially over what constitutes rewilding, then whether it is a good thing and then how to do it. I would argue that rewilding in the right place is exactly the right thing to do - but the key is the right place. As with all of these issues, what we need to do is come from a position of facts and evidence, not emotion and ideology (and I’m not just talking about rewilders here). We need to put meat on the bones around what the impact of “green jobs” (my current pet hate phrase, as it says everything and means nothing) will be. We need to understand which jobs are and are not “green” and what skills are required. Currently it seems to be a get-out phrase whenever the economics is questioned. Trying to move beyond tribalism can only come via learning and understanding. It takes time and it is not always fun, but it is incumbent on bodies, like SLE, to push ourselves to make sure our members have the best information available to understand issues and the ability to make informed choices. For more information www.scottishlandandestates.co.uk

Telephone : 0131 653 5400

the complexity and devolved powers.

“This report sets out steps that can be taken to steadily increase the role that land value plays in taxation, as well as specific reform opportunities to tackle priorities including derelict land regeneration and a just transition.

“Tax is a potentially significant influence in delivering Scotland’s land policy objectives and we recommend an ongoing programme of reforms. Discussing changes to taxation often attracts passionate debate and strong views, our international research has shown how important direct public engagement is in discussion and consideration of the options for changes in land taxation. That is why we also advise that a national conversation needs to happen to help build consensus on the options for taxing land and making the most of Scotland’s land.”

If farmers are looking for a successful and rewarding exit, now is the time While demand for all manner of land in Scotland has rarely been more urgent, the farm sales market remains stubbornly quiet, and shortage of supply continues to act as a drag anchor as sellers sit tight.

Their reluctance is hardly a surprise. We have seen it before, particularly in the aftermath of the banking crash in 2008, when the air was thick with fear and uncertainty. The last few years in Scotland have also had their share of geopolitical upheavals, generating similar levels of anxiety.

But while it is a natural instinct for farmers to wait out a crisis – land, after all, does not go off – it does create something of a conundrum for them, since those who do take their properties to market are achieving quite stellar prices from a jostle of competing willing buyers.

In fact, it could be argued that now is the time – indeed, there has hardly been a better time – for land management professionals to realise assets, with the proviso that they should be guided in their enterprise by experts such as Baird Lumsden, the rural department of DM Hall Chartered Surveyors.

The disposal of properties with which we have been entrusted over the past 12 months has been singularly successful, with almost all attracting intense interest, going to a closing date and achieving prices well in excess of what the sellers had anticipated.

Despite what might be assumed from a superficial glance at the agricultural sector in Scotland, farming is actually in quite a good state at the moment. Certainly, inputs such as fertiliser and fuel prices are up, but so are returns on cereals, lamb and beef. Potato prices are slightly down, but they had a good run last year.

Demand for land in Scotland has seldom been greater

The subsidy regime, delivery of which has transferred from the EU into the hands of the UK Government, is functioning as it should and is likely to do so for the foreseeable future, though it will begin to taper off in the next few years. The focus moving forward is on sustainability and modern farming methods that balance social and economic needs.

Subsidies are also likely to be associated much more closely with the current environmental agenda, with incentives to plant trees and protect hedgerows, rather than as a simple financial prop for unproductive businesses.

Income from traditional farming activities remains an important factor, but gross revenues now tend to include woodland planting, carbon capture and in many cases, substantial commercial and leisure activities.

Rural businesses set to suffer as short-term lets legislation passes

Rural businesses are set to suffer following the Scottish Parliament’s passing of a short-term lets licensing order which is hugely disproportionate to the problems that are claimed to be managed, Scottish Land & Estates has said today.