Review & Modernisation of Rates

Overview

In the Programme for Government 2016 – 2021, the Council of Ministers has committed to reviewing the domestic (household) rates system.

The Cabinet Office has accepted responsibility to set out a full plan for rates modernisation by June 2019. In October 2018, the Minister of Policy and Reform gave a statement to Tynwald expanding the scope of this review to also include non-domestic rates.

What are rates?

Rates is the common name for the annual charge levied on property, paid by the owners or occupiers of each property on the Isle of Man every year. Rates comprise of domestic rates – the charge levied on properties which are wholly or used mainly used as private dwellings, and non-domestic rates – the charge levied on all properties that do not pay domestic rates.

Each property on the Island has been allocated a Rateable Value in pounds (£) based on what the property could have been rented out for, should it have been in a good state of repair with the landlord meeting insurance, tax and maintenance costs, in 1969. If the property was built or extended after 1969, it is given a rate similar to one that had been built before 1969.

The current rates system is based on the Rating and Valuation Act, 1953.

Each year, a charge is set by each Rating Authority and information is sent to the Isle of Man Government, Treasury Department who issue invoices and collect payments (apart from Braddan, Douglas and Onchan who arrange these themselves). The monies collected are then paid over to the Rating Authorities to maintain the services that they provide to the residents of their area.

The main Rating Authorities are the Commissioners (Local Authorities) of which there are 22 covering the island, and Manx Utilities. A pricing review report prepared by Manx Utilities and endorsed by the Council of Ministers, was received by Tynwald in October 2018. This included recommendations about a 5 year pricing strategy, water and sewerage rates and these recommendations were approved by Tynwald.

If you want further details on how Rates are currently calculated, and how they will be calculated going forward, please see – Rates Information Sheet.

Why your views matter

Why is the rates system being reviewed?

Following the 2015 consultation, it was found that only 38% of the respondents understood the current method of rating assessment based on rental values.

It is considered unfair by some that properties on the Isle of Man have not been revalued since 1969, at which time properties in more urban areas were attributed with higher rental values. As the population of the island has become more mobile over the last 50 years with people now able to live in more rural locations and commute to their place of work it is considered by some that properties should be reassessed.

The aim of rates reform and modernisation is to provide a transparent, understandable and fair system by which to calculate and collect charges levied on property. The consultation below focuses mainly on non-domestic rates, however, it also aims to build on the information collected during the 2015 consultation on domestic rates.

What is included in the review?

Given the potential scope that rates modernisation could encompass, we determined that there needs to be a framework which specifies what the scope of the project will and will not include. The following guidelines were agreed:

• Rates, whether domestic or non-domestic, is a charge that will remain based on property
• Local Authority reform does not fall within the scope of this review; however, the information gathered in the consultation may, at a later date, be used to consider further reform.
• It is not our intention to raise additional funds through the collection of rates. The review intends to spread the burden of rates more fairly across the properties on the island.

It was also determined that any new method of calculation introduced should be based on the following principles:

• Simple to understand
• Transparent
• Fair
• Cost less to administer going forward than the current system
• Enabled by technology

What happens next?

Following the outcome of this consultation, a plan for rates modernisation will be presented to Tynwald in June 2019 for debate. Subject to that plan’s approval, it is intended that legislation will be drafted in the 2019/20 parliamentary session. Revaluation of properties would be undertaken as soon as possible for movement to the new system with systematic revaluation of properties thereafter.

What happens next

Following the outcome of this consultation, a plan for rates modernisation will be presented to Tynwald in June 2019 for debate. Subject to that plan’s approval, it is intended that legislation will be drafted in the 2019/20 parliamentary session. Revaluation of properties would be undertaken as soon as possible for movement to the new system with systematic revaluation of properties thereafter.