Replace business rates with landowner levy: note

Central fiscal result

+£0.0bn - Net fiscal impact in 2028-29

Low case: -£3.0bn. High case: +£3.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models replace business rates with landowner levy by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£0.0bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross tax or receipt yield: +£0.0bn
• Behavioural and avoidance response: +£0.0bn
• Administration and compliance cost: +£0.1bn
• Other tax-base interactions: -£0.1bn

Central net impact: +£0.0bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: +£0.0bn. Phased implementation and take-up.
• 2027-28: +£0.0bn. Phased implementation and take-up.
• 2028-29: +£0.0bn. Phased implementation and take-up.
• 2029-30: +£0.0bn. Phased implementation and take-up.

Main source groups

• HMRC, "Direct effects of illustrative tax changes" (2025): Ready reckoners show direct tax-change effects but are approximate for large reforms; used to scale tax proposals cautiously.
• Kotlikoff and Summers, "Tax Incidence" (Handbook of Public Economics, 1987): The legal payer of a tax is not necessarily the person bearing its economic burden; supports incidence discussion across taxes.
• Mirrlees and review team, "Tax by Design" (Institute for Fiscal Studies, 2011): Efficient tax systems should avoid narrow bases and poorly targeted reliefs that distort decisions; useful benchmark for judging tax-base changes and exemptions.
• Liberal Democrats, "For a Fair Deal: Liberal Democrat Manifesto 2024" (2024): The manifesto gives announced policy detail across health, care, housing, taxes and climate; used to define the policy scenarios.