The Welsh Government has the power to develop specific taxes for Wales – and it intends to do so, by bringing in a Vacant Land Tax.
The tax is currently only at the development stage, and the Welsh Government will have to consider the policy in detail at a later date. The first step is to get Westminster’s approval, which involves it assessing whether or not the tax would be detrimental to the rest of the UK. If it agrees, the Welsh Government can go ahead and develop the policy.
What is the proposed tax?
At the moment, it looks like the Vacant Land Tax will apply to land that’s been granted all necessary planning permissions and other consents for development – but where there’s been no development.
Why is the tax being introduced?
Essentially, the tax is being introduced to encourage development. The wider policy is to make sure that land is developed where it possibly can be – and not left sitting vacant. It’ll also try to make sure that barriers to development are removed where possible. If the Vacant Land Tax raises sufficient revenue, the Welsh Government may also look at possible development incentives, too.
Who will it apply to?
Crucially, the tax will apply to all land owners of both commercial and residential developments – private developers, local authorities, housing associations, and even the Welsh Government itself. But, if there are genuine reasons for the lack of development, that are outside of the land owner’s control, the tax wouldn’t apply.
What happens next?
Mark Drakeford, the Cabinet Secretary for Finance in the Welsh Government, expects Westminster to approve the proposal early next year. Then, there’ll be a consideration period, where key stakeholders will discuss the tax, before bringing it in before 2021, if everything runs smoothly.
The Minister made reference to taking lessons from the Irish system, which broadly currently applies a tax of 3% of market value to land that’s not been developed – with this increasing to 7% of market value from next year. If things go to plan, the Welsh Government would set the wider law and policy, but local authorities would have discretion over certain elements, so that they’re able to take area-specific factors into account.
Watch this space.
