Agenda Item No: Report No: Report Title: Council Tax: Setting the Tax Base 2005/2006 Report To: Cabinet Date: 5 January 2005 Lead Councillor: Councillor Ann De Vecchi Ward(s) Affected: All Report By: Director of Finance and Community Services Contact Officer(s): Stephen Jump, Financial Services Manager Purpose of Report: To seek approval of the Council Tax Base for 2005/2006 Officers Recommendation(s): 1 To confirm that the level of council tax discount in respect of second homes remains at 10% 2 To confirm that the level of discount in respect of long-term empty properties remains at 0% 2 To approve that, in accordance with the Local Authorities (Calculation of Council Tax Base) Regulations 1992, the amount calculated by the Lewes District Council as its Council Tax Base for 2005/2006 shall be 37,022.99, made up of the individual tax bases for the Parishes and Towns as set out in Appendix 2 of this report. Reasons for Recommendations 1 The Council is required to approve the tax base which will be used for the purposes of calculating the 2005/2006 Council Tax. Information 2 Legislation 2.1 The Council is required by law to set the Council Tax tax base before 31 January each year. This will enable the County Council, Sussex Police Authority and East Sussex Fire and Rescue Service to apportion their precepts between the billing authorities in the county on the basis of their tax bases. 2.2 The Local Government Act 2003 amended section 67 of the Local Government Finance Act 1992, which means that a full Council meeting is no longer required to adopt the council tax base that is used when setting council taxes. The Council has also delegated to the Cabinet the authority to determine the level of discounts which will be granted in respect of second homes and long-term empty properties in accordance with section 75 of the Local Government Act 2003. The Council has decided not to introduce a local scheme of discounts and exemptions in accordance with section 76 of the Local Government Act 2003. 2.3 The Local Authorities (Calculation of Council Tax Base) Regulations 1992 contain the rules for calculation of the Council Tax Base for the District Council and Town and Parish areas. These were amended by The Local Authorities (Calculation of Council Tax Base) (Amendment) (England) Regulations 2003 in order to introduce the rules for second home, long-term empty and local discounts. 3 The Tax Base 3.1 The Council Tax Base must be expressed in terms of equivalent “Band D” properties after allowing for discounts, exemptions and specified adjustments including losses on collection. The Government provides a conversion factor to be applied to each of the Bands A to H in order to obtain the equivalent number of “Band D” properties as set out below. Valuation Band Conversion Factor Less than £40,000 A 6/9 of number of dwellings Less than £52,000 B 7/9 “ “ “ “ Less than £68,000 C 8/9 “ “ “ “ Less than £88,000 D 9/9 “ “ “ “ Less than £120,000 E 11/9 “ “ “ “ Less than £160,000 F 13/9 “ “ “ “ Less than £320,000 G 15/9 “ “ “ “ Greater than £320,000 H 18/9 “ “ “ “ 3.2 Occupiers qualifying for disabled relief who are in properties above Band A, move down a band for Council Tax purposes. Occupiers qualifying for disabled relief in Band A properties receive relief equivalent to 1/9th of a Band D tax. The annual equivalent number of qualifying occupiers is adjusted in lines 6a and 6b in Appendices 1 and 2. 3.3 The Council is able to vary the amount of discount that will apply in respect of properties which fall into the specified categories of „second homes‟ and „long-term empty‟. In 2004/2005, the Council agreed that these discounts should be 10% and 0% respectively and the tax base for 2005/2006 has been calculated on the basis that the level of these discounts remain unchanged. 3.4 Appendix 1 sets out details of the tax base for the whole District. The estimated number of dwellings in the District (line 7) which will be chargeable for all or part of the year has risen from 40,594 in 2004/2005 to 40,732 in 2005/2006. The total estimated Council tax base (line 15) has increased by 75.53 from 36,947.46 to 37,022.99 Band D Equivalent dwellings. This means that for every £37,022.99 of precept on the Collection Fund the Council Tax will be £1.00 for a Band D property. The constituent parts of the total tax base relating to Towns and Parishes are shown at Appendix 2 and will be used to calculate the addition to Council Tax bills relating to individual local Council areas in the District. The Towns and Parishes will be advised of these individual tax bases in order that they can assess the impact of their precept on the Council Tax in their area. Appendix 3 shows graphically the tax base for Lewes District analysed by Band. 3.5 It is not possible to determine at this stage what the Council Tax within Lewes District will be, as this is dependent upon the precepts levied on the Collection Fund by East Sussex County Council, the Sussex Police Authority, East Sussex Fire and Rescue Service, Lewes District Council, Town and Parish Councils (which have yet to be determined), and any balance on the Collection Fund. 4 Setting the Council Tax 4.1 The Council meeting on 24 February 2005 will approve the net budget requirement and the Lewes District Council demand upon the Collection Fund. It is then necessary to “set” the Council Tax for each band by Parish/Town area taking into account the County, Sussex Police Authority, East Sussex Fire and Rescue Service and Town and Parish Precepts. 4.2 Whilst the demand upon the Collection Fund must be determined by the Council, the mechanism for setting the Council Tax is purely an administrative calculation prescribed by Section 30 of the Act and contains no element of discretion. Whilst it is intended both to determine the budget requirement and set the Council Tax at the Council meeting on 24 February 2005, it is possible for Council Tax setting to be delegated to the Cabinet. Financial Appraisal 5 There are no financial implications arising directly from this report. Environmental Implications 6 There are no environmental implications arising from this report. Risk Management Implications 7 I have completed the Risk Management questionnaire and this report does not require a risk assessment because the issues covered by the recommendations are not significant in terms of risk. Background Papers 8 None Appendices Appendix 1 - Lewes District Council Total Tax Base Calculation 2005/2006 Appendix 2 - Tax Base Calculation 2005/2006 by Parish/Town Council area Appendix 3 - Graphical Representation of Total Tax Base 2005/2006 Appendix 1 EXPLANATORY NOTES ON THE CALCULATION OF THE COUNCIL TAX BASE Line 2 – gives the number of dwellings on the Listing Officer‟s Valuation List by Band at the statutory date of 30 November 2004. Line 3 – sets out the anticipated new dwellings to be added during the year and adjusted to allow for the fact that not all of these additional properties will be on the list from 1 April. Line 4 – shows the estimated reductions due to demolitions. Line 5 – sets out the exemptions by band within the statutory categories. Line 6a – sets out dwellings taken to a lower band due to disabled relief within statutory categories. Line 6b – sets out dwellings added from a higher band due to disabled relief within statutory categories. Line 7 – chargeable dwellings = lines 2 + 3 – 4 – 5 – 6a + 6b. Line 8 – value of single person discounts = 25% of number of properties included in line 16. Line 9 – value of discounts where there is no eligible person in the property = 50% of number of properties included in line 17. Line 10 – value of discounts for second homes assuming a 10% discount = 10% of number of properties included in line 18. Line 11 – value of discounts for long-term empty homes assuming a zero discount = 0% of number of properties included in line 19. Line 12 – total discounts = lines 8 + 9 + 10 +11 Line 13 – net dwellings = line 7 – line 12. Line 14 – converts these into Band D equivalents by applying the Band ratios quoted at the top of the table. The 'TOTAL' is rounded to 2 decimal places. Line 15 – is the total Council tax base, with the overall total for each area calculated by applying a collection rate of 98.5% to the total of line 14. Individual figures for each band are for information only and will not necessarily add to the total shown because of rounding differences.