Information on Isle of Man Property Rates

How rates (domestic and non-domestic) on the Isle of Man are currently

calculated:

The current system is based on a 1969 valuation of all of the property that was on the Isle

of Man at that time. The detail of each property was documented on the basis of square

foot and a rental value was attributed as if the property was going to be rented and the

landlord would meet the rates, maintenance and any other repairs. This rental value is

called the Gross Value.

Any properties built or improved on the Island since 1969 are compared to a similar

property that was in existence at that time and attributed a similar value. The Isle of Man

Government effectively carries out these assessments and ascertains property value for the

Rating Authorities.

Depending on the type of property, the Gross Value is then reduced to give the property a

Rateable Value. Such reductions include:

• Agricultural land – exempt from payment of rates

• Domestic properties – 20%

• Offices, shops etc. – 20%

• Commercial – 30%

• Factories and engineering works – 30%

• Industrial – 50%

• Hotels – currently receive a 50% reduction, however this is being phased out over 5

years to the point that no discount will be given

On the Island there are over 40 individual Rating Bodies (i.e. Local Authorities, Churchyard

& Burial Authorities, Swimming Pool Boards etc.), however the majority of the rates are set

by Local Authorities and Manx Utilities (“MU”). Each year the Local Authorities and the MU

determine a pence in the pound (p/£) rate either for their area in the case of the Local

Authorities or for the island as a whole in the case of MU. The Local Authorities charges

cover the provision of local amenities and refuse collection whereas the MU provide water

and sewerage facilities using rates. The calculation of the rates invoice is then as follows:

Where: Rateable value of property = £96

Local Authority rate = 92p/£

Churchyard rate = 10.50p/£

Refuse rate = 60p/£

Fixed refuse rate = £160

MU water rate = 341.80p/£

MU sewerage rate = 98p/£

Rateable Value x Local Authority Rate : £96 x 0.92p = £88.32

Rateable Value x Churchyard Rate: £96 x 0.1050p = £10.08

Rateable Value x Refuse Rate: £96 x 0.60p = £57.60

Fixed Refuse Rate: £160

Total Rating Authority charge: £316.00

Rateable Value x MU Water Rate: £96 x 341.80p = £328.13

Rateable Value x MU Sewerage Rate: £96 x 0.98p = £94.08

Total MU charge: £422.21

Total Rates invoice: £738.21

A discount of up to 5% is then offered for payment of the rates invoice if paid prior to the

July of the year issued.

One of the main functions of the Rating Authorities is to provide the required services to

their rate payers. The Local Authorities on the Isle of Man undertake a range of functions,

the main ones are detailed below, with the provision of these varying according to the size

of the authority:

• Refuse collection

• Street lighting

• Public conveniences

• Parks, playgrounds and other leisure facilities

• Housing

• Car parking

• Street Cleaning

• Libraries

• Gully emptying, removal of weeks and hedge trimming

Details of all services provided by the Local Authorities can be found at:

https://www.gov.im/media/1362293/list-of-functions-local-authorities.pdf

The outcome of this consultation will aim to update the way that the Gross Value of a

property is calculated to move away from a basis of rental values of properties in 1969.

It is understood that a significant number of properties have been built on the Island since

1969 and also that the population of the Island has become significantly more mobile in the

last 50 years when properties in towns were at a premium. As such the current system

requires updating. The replacement system of calculation of a rateable value should be:

• Simple to understand

• Transparent

• Fair

• Cost less to administer going forward than current system

• Enabled by technology

New method of calculation of Domestic Rates:

During this review of Isle of Man rates system, we are looking only at updating the method

upon which properties are assessed (i.e. in the example above, this would be the £96 of

rateable value), not the services provided by Rating Authorities or the amount charged for

each service.

All properties will be measured on the same basis, the majority by plan view resulting from

aerial photographs. Should an aerial view of a property be obscured then surveyors will be

sent to the property, with agreement of the owner, to measure the property area using laser

equipment.

An image of the property will then be generated detailing the individual elements of each

property (e.g. two storey house with a one storey kitchen extension) and a square metre

area value will be calculated and attributed to the property. The area is not just the ground

of the building covered, but includes the area of all floors etc.

As additional properties are built or extended property areas can be updated when building

inspectors sign off a property as completed. Periodic aerial photography of the island, which

is currently already undertaken, can be used to ensure that any additions to properties that

do not fall under planning permission applications are noted and measured.

A polygon for a property could look similar to the below:

A rate will be set by each Rating Authority per square metre which will allow for the

calculation of the invoice amount. The calculation would be similar to:

Square metres x Rating Authority Rate = Rating Authority amount

(Commissioners, churchyard etc)

Square metres x MU Rate = MU amount

(Water and sewerage cost)

____________________________

Invoice amount

Basis of calculation of Non-Domestic Rates:

Whilst the majority of businesses rent the properties from which they operate, which

provides a greater understanding of rental values than in the domestic market where the

majority of homes are owned, it would be more complicated going forward to maintain two

systems to administer property rates. As such, non-domestic properties would also be

measured using the above outlined area assessment. This aligns with the principles detailed

above, providing a more transparent basis of assessment which is easier to understand and

cheaper to administer in the long-run.

Rating legislation:

The valuation of properties, parameters of rating, and, amongst others, policies on

dilapidations, charities and discounts are set out in the Rating and Valuation Act, 1953, a

copy of which can be found at

https://legislation.gov.im/cms/images/LEGISLATION/PRINCIPAL/1953/1953-

0004/RatingandValuationAct1953_5.pdf

There are also peculiarities in the current system in respect of some industry sectors, such

as the basis of calculation for some sectors, such as casinos, mining and quarrying, differs

from that of attributed rental values and involves additional pieces of legislation.

In respect of quarrying and mining, under the Rating and Valuation Act, 1953, companies in

these sectors pay non-domestic rates based on the previous year’s mineral royalty payment.

As such, the annual rates payment for each company in this industry fluctuates in line with

their annual turnover, creating high levels of uncertainty for these businesses particularly

when planning and forecasting. Adopting a new basis of assessment would allow a review

of the rating legislation that applies to different industry sectors on the Isle of Man.

In determining a new route forward with the calculation of domestic and non-domestic rates

it is envisaged that all existing legislation relating to rating will be replaced with one new

Rating Act.