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MAIDSTONE BOROUGH COUNCIL

CABINET

16 DECEMBER 2009

REPORT OF HEAD OF FINANCE

Report prepared by Paul Riley

Head of Finance

1.           COUNCIL TAX 2010/11 – COLLECTION FUND ADJUSTMENTS

1.1        Issue for Decision

1.1.1   This report details the anticipated balance on the Collection Fund as at 31 March 2010 relating to the collection of local taxation.

1.1.2   Under the statutory timetable laid down, it is necessary that these matters be decided by 15 January 2010.

1.2        Recommendation of Head of Finance

1.2.1   That Cabinet agree the projected surplus on the Collection Fund as at 31 March 2010 relating to Council Tax of £65,979 be split as follows for the purposes of setting the Council Tax for 2010/11.

1.3        Reasons for Recommendation

1.3.1   Members will be aware that this Authority is required to maintain a Collection Fund which accounts for all local tax payments.  The income into the Fund along with Council Tax Benefit payments is used to pay the precepts to Kent County Council, Kent Police Authority, Kent Fire Authority and the equivalent demand from this Authority (which includes Parish Precepts).

1.3.2   For the Council Tax, which was introduced in 1993/94 it is necessary to assess on an annual basis, the likely balance on the Collection Fund as at 31 March of the current financial year.  Any balance, either debit or credit, must be taken into account in the following financial year.  However, the balance on the fund, under the statutory conditions relating to Council Tax, does not become a credit or charge on this Authority solely but needs to be split between Kent County Council, Kent Police Authority, Kent Fire Authority and this Authority on the basis of the demand or precept in the current financial year

1.3.3   The current situation regarding Council Tax in 2009/10 is detailed in APPENDIX A.  This Appendix details the original estimated level of Council Tax income for the year, net of exemptions and discounts, to pay for precepts and demands on the Fund.  This totals £86,182,049.

1.3.4   APPENDIX A also details the latest situation regarding Council Tax bills despatched, incorporating exemptions and discounts.  Total income is now anticipated to be £86,247,587; therefore a small surplus of £65,538 is anticipated for 2009/10.  The Collection Fund has produced this small surplus due to the continuing increase in properties on the valuation list albeit at a reducing rate to reflect the current economic climate.  The impact of this is reflected in the tax base report that will be considered by General Purposes Committee in January 2010.  The projection also includes an allowance for properties that will come on to the valuation list up to March 2010.

1.3.5   The actual Council Tax surplus, as at 31 March 2009, was £110,198 of which £109,757 was taken into account in setting the Council Tax in 2009/10.  Therefore, £441 is available and must be used in 2010/11 to reduce Council Tax liability.

1.3.6   Therefore, in total it is estimated that there will be a Council Tax Collection Fund surplus anticipated for 2010/11 of £65,979 at 31 March 2010.  This is fully detailed in APPENDIX A.

1.3.7   Based on the appropriate Government Regulations, this estimated surplus must be used to reduce the level of Council Tax in 2010/11.  However, this surplus must be made available to this Authority, Kent County Council, Kent Police Authority and the Kent and Medway Towns Fire Authority in proportion to the level of demand and precepts in the current year.  The detailed factors are shown in APPENDIX A.  Therefore the amount of the 2009/10 surplus relating to each Authority is as follows:-

1.4        Alternative Action and why not Recommended

1.4.1   It is a statutory requirement that this adjustment is made using this calculation method.

1.5        Impact on Corporate Objectives

1.5.1   The Collections Fund adjustment due to this Authority will reduce the Council Tax requirement in 2010/11.  This amount will be taken into account in the overall Budget Strategy process.

1.6        Risk Management

1.6.1   The major risks relating to the overall position of the Collection Fund are the initial calculation of the Tax Base (which is dealt with in a report to the General Purposes Committee in January 2010) and the rate of collection.  This latter risk is monitored on a monthly basis to ensure good collection rates.  Current collection rates are also anticipated in the Strategic Plan.

1.7        Other Implications

1.7.1    

1.7.2   The Collection Fund adjustment will be taken into account in the Budget Strategy process and, along with other funding factors, will provide resources to reduce the Council Tax requirement for 2010/11.

1.8        Background Documents

1.8.1   None.