A five-year route to modernising land tax administration

How reform can be delivered

The route-map provides a direction of travel that within five years would improve the land tax administration. It sets out practical milestones that Scottish Government can deliver with the collaboration of public sector delivery bodies. Delivering the workstreams requires further, more detailed development and a programmatic approach as they are closely interlinked. The Scottish Land Commission can support programme delivery through convening stakeholders and advising Scottish Government.

Each stage of the programme will deliver improvements that support policy delivery and efficiency while making progress to an improved system of land administration. Broad phases of work and key milestones include:

A phased programme delivering benefits from the outset includes the following building blocks:

Make better use of land data for tax decisions

Intended outcome

A more complete system of land information that shares public sector data to inform tax decisions in real time.

Why this matters

Access and availability of high quality and up-to-date land data is required to help design and implement tax changes. A more complete and transparent approach to land information increases trust and creates a high-performing tax system.

Limitations of land ownership, use and emissions information are limiting the use of scenario modelling and new policy mechanisms. Other tax jurisdictions have more complete and technologically advanced systems, with automation and interconnected data systems supporting public service delivery.

Steps to deliver by 2031:

1. Map baseline land data requirements (including use, ownership and values).
2. Identify needs and options for organising and digitising land data.
3. Assess and identify delivery models for improved system of land information.

To do this, public bodies should work in collaboration to identify data and system needs. The Scottish Land Commission will convene a Land Data Implementation group that can help lead this.

Benefits of this approach

From the outset: More up-to-date land information will benefit and inform tax decisions as improvements are made.

Over the longer-term: Progress towards a land information system can incrementally achieve wide-ranging efficiencies across other policy areas such as land use planning and development.

Improve land and property valuation

Intended outcome

Make it easier to value land and property regularly and for valuation to operate alongside other types of land data.

Why this matters

Scottish Government is already taking steps to update and improve Non Domestic Rates and Council Tax reform. However, more steps are needed to ensure that it becomes easier to value land and property regularly and that it operates alongside types of land data.

This is crucial to deliver more effective and targeted fiscal policy, improve transparency and effectiveness and align with international approaches to valuation for tax policy. For example, the valuation roll is the only public record of non-domestic property value, but certain land types are exempt. Considering how and why land is valued is an essential starting point to inform future tax and fiscal policy.

Steps to deliver by 2031:

1. Assess opportunities and barriers to improving system of land valuation for non-residential property.
2. Develop options for extending the valuation roll or developing additional public registers.

Research into international valuation approaches offers an assessment framework and a starting point to inform options.¹³

Benefits of this approach

From the outset: Support changes to the current non-domestic rates system and inform more targeted tax measures to unlock economic activity.

Over the longer-term: Support more effective and targeted fiscal policy, improve transparency and effectiveness, and better align Scotland with international approaches to valuation for tax policy.

Build a more joined-up system for delivery

Intended outcome

A coordinated and user-focused approach to land tax administration that has the capacity, resources and digital infrastructure needed to support wider tax reform.

Why this matters

Fiscal reforms should deliver value for money and real impact. To help with this, a better understanding of capacity in the system to introduce changes and support wider tax reforms is required such as expanding the valuation roll, developing digital platforms or portals for improved tax administration.

This involves looking at all interactions and users of the system including local authorities, assessors and taxpayers.

Steps to deliver by 2031:

1. Map user journeys and experiences of land tax administration.
2. Identify digital transformation and resource needs.
3. Develop a platform that supports the delivery of tax services.

This plan should be developed in collaboration with public bodies such as COSLA and Revenue Scotland and should be fully costed. It should be informed by the Scottish Approach to Service Design and be user-centred.

Benefits of this approach

From the outset: A coordinated, whole-system approach will help identify and address problems early and scope practical opportunities for collaboration.

Over the longer-term: Identify efficiencies across the public sector and enable resources, knowledge and expertise to be shared effectively.

Innovate and test to support land policy

Intended outcome

Research, model and test the capacity of the tax administration system to support land-based tax policy proposals.

Why this matters

Research into a carbon land tax and tax impacts on reuse of derelict land identifies that there is rarely a single tax ‘solution’ and that a systems approach across different policy areas is required to tackle complex policy problems. 

If land-based taxation is to play a greater role in supporting policy priorities such as reducing emissions from peatland or supporting town centre regeneration then there is a need to research, model and test the capacity of the system of tax administration to support policy proposals.^{14 15}  

Testing and piloting elements of the system is important to ensure it is fit for purpose and fits within a wider strategic policy context.

Steps to deliver by 2031:

1. Commit to working with a local authority to test tax reforms supporting 
   reuse of derelict land.
2. Create a facility to explore and model land-based taxes.

Scottish Government could choose several land policy challenges to test alongside the above workstreams. Research institutions and programmes such as Scottish Government’s CivTech challenge can facilitate and support delivery of these steps.

Benefits of this approach

From the outset: Help identify more immediate tax interventions and bring to the fore issues that are impeding the delivery of local taxes.

Over the longer-term: Develop a tax administration system that is fit for purpose and better able to support place-based outcomes and wider strategic policy priorities.