Alternatives considered and
why rejected
Tax Base - Option 1
(APPROVED)
1.
2.
3.
3.1
An assessment of
the information held by both the Revenues Service and the Planning Service
suggests that between October 2022 and March 2024 a total of 1,271 properties
will be added to the Council tax records. Distributing this sum evenly over
the period and taking the average, to identify the effect on the tax base for
2023-24, the result suggests an increase of 897 band D equivalent properties.
Adjusting this figure for the current levels of discount and other allowances
suggests a decrease of 213 properties from the CTB1 figure.
3.2
This figure is
significantly lower than the 1,271 new properties identified because they
will not all be band D properties, they will not all start to pay Council tax
at the beginning of the year and some will receive the discounts and
allowances that are part of the system.
3.3
Furthermore, the
revised total tax base must be adjusted to allow for non-collection for which
has been calculated at 1.5%.
3.4
The calculation
is set out in the table below:
Tax Base as at Appendix 1
|
67,374.80
|
New properties (Avg: by band D & time)
|
896.71
|
Adjustment for potential allowances
|
-89.67
|
Non-collection allowance (1.5% of above)
|
-1,020.14
|
Proposed Tax Base
|
67,161.69
|
Table 1: Proposed tax base
2023-24
3.5
The overall
position represents year on year growth in the tax base estimate of 1.92%.
The increase is very close to the current estimate in the strategic revenue
projections, which are based on an estimated 2% growth in the tax base.
3.6
Appendix 2 to
this report provides details of the tax base for each parish based on an
identical calculation.
Tax Base - Option 2
(REJECTED)
3.7
It would be
possible to vary some of the factors set out above. The exception is the
figure from Appendix 1 as this is reconciled to the District Valuers’ records
and has been reported to central government. The other figures given above
are based on current known data and though they could rise or fall during the
year.
3.8
The risks of
making an inaccurate calculation are set out in paragraph 2.6 above and as
the data used in calculating Option 1 is accurate and evidenced any variation
the committee may wish to make should be similarly evidence based.
Tax Base - Option 3
(REJECTED)
3.9
The do nothing
option is not available to the Council as it has a statutory obligation to
set a tax base each year.
Collection Fund Adjustment
- Option 1 (APPROVED)
3.10
A projection for
31 March 2023 based on the current position is provided at Appendix 3. This
appendix details the precepts and demands on the fund for 2022-23 totalling
£137,399,468.
3.11
Appendix 3 also
details the current position regarding Council tax bills dispatched,
incorporating exemptions and discounts, and an allowance for irrecoverable
debt. Total income is now anticipated to be £138,448,759; therefore a
surplus of £1,049,291 is anticipated for 2022-23.
3.12
A forecast
surplus of £2,130,839 for the current financial year is being allocated to
major preceptors and this Council’s general fund. The actual outturn
position at 31 March 2022 was a surplus of £4,141,782 in respect of council
tax. This brings the forecast cumulative surplus as at 31 March 2023 to
£5,191,073.
Deficit Phasing
3.13
Ordinarily, this
surplus would be apportioned according to preceptors’ respective shares of
council tax and recovered from the general fund and major preceptors over the
next financial year in accordance with the provisions of the Local Government
Finance Act 1992 as follows:
Preceptor
|
£
|
Maidstone Borough Council
|
780,120
|
Kent County Council
|
3,637,927
|
Kent Police Authority
|
568,006
|
Kent and Medway Towns Fire Authority
|
205,020
|
Total projected surplus as
at 31 March 2023
|
5,191,073
|
Table 2: Forecast cumulative surplus
on the council tax account for 2023-24
3.14
However, as a
result of pressures associated with the Coronavirus pandemic, and the
significant deficits in council tax and business rates which resulted from
this, the Government amended secondary legislation to allow authorities to spread
the estimated deficit on the 2020-21 Collection Fund over the three years
2021-22 to 2023-24. The provisions do not allow deficits in other financial
years to be phased.
3.15
Alongside the
cumulative estimated surplus as at 31 March 2022, an adjustment is required
for the ‘exceptional balance’ calculated in respect of 2020-21. This
represents the estimated 2020-21 deficit, net of any ‘prior year’ elements
(the prior year element is the difference between the estimated and actual
surplus/deficits for 2019-20 and is calculated as the difference between the
‘opening balance’ on the Collection Fund at 1 April 2020 and the sums paid
to/from the Collection Fund during the course of 2020-21 in respect of the
estimated surplus/deficit calculated by authorities in January 2020). The
exceptional balance for council tax was calculated to be a deficit of
£3,181,894.
3.16
As the
exceptional balance calculated for 2020-21 was a deficit, the deficit phasing
provisions were triggered and this amount must be spread in three equal
portions across the three financial years 2021-22 to 2023-24. In the
interests of reducing potential complication as far as possible, the
exceptional balance may not be adjusted in the event that the end of year calculation
of actual surplus or deficit for 2020-21 produced a different amount. There
was no provision in the regulations to allow authorities to opt out of the
deficit phasing, or to adopt a different payment profile.
3.17
The Local
Authorities (Funds) (England) Regulations 1992 require collection fund
surpluses and deficits to be apportioned on the basis of each billing
authority and major preceptor’s share of the aggregate council tax
requirement for the billing authority’s area for the ‘preceding year’. This
apportions the share of the estimated exceptional balance which will be
spread across 2021-22, 2022-23 and 2023-24 as follows:
Preceptor
|
£
|
Maidstone Borough Council
|
492,546
|
Kent County Council
|
2,224,404
|
Kent Police Authority
|
334,419
|
Kent and Medway Towns Fire Authority
|
130,525
|
Total projected exceptional balance as at 31 March
2022
|
3,181,894
|
Table
3: Forecast exceptional balance on council tax at 31 March 2021
3.18
The phasing
provisions detailed within the preceding paragraphs require that two thirds
of the exceptional balance be removed from the calculation, with the first
two thirds having been recovered during 2021-22 and 2022-23, and the
remainder to be recovered during 2023-24. The impact of this amendment
leaves an adjusted deficit for council tax to be recovered in 2023/24 of £1,060,632
apportioned as follows:
Preceptor
|
£
|
Maidstone Borough Council
|
164,182
|
Kent County Council
|
741,468
|
Kent Police Authority
|
111,473
|
Kent and Medway Towns Fire Authority
|
43,508
|
Total deficit to be recovered during 2023-24
|
1,060,632
|
Table
4: Apportionment of council tax deficit to be recovered in 2023-24
3.19
Authorities’
shares of the aggregate area council tax requirement can vary from year to
year, creating a risk that their shares of the phased exceptional balance
could change during the lifetime of the scheme. To prevent this, the
regulations require the exceptional balance to be apportioned each year
according to the authorities’ council tax requirements in 2020-21. All other
estimated surpluses or deficits will continue to be apportioned according to
the council tax requirements of authorities at the time of the estimate.
Collection Fund Adjustment
- Option 2 (REJECTED)
3.20
The committee
could choose to vary the figures used in the estimate provided within the
appendices. However, these are based on data from the revenues system,
projections developed from past experience and known factors. They are
considered to represent a reasonable basis for estimating the position on the
collection fund at 31 March 2023.
3.21 Should the committee choose to vary
the data and distribute a different surplus or deficit this could affect the
balance on the collection fund and the Council’s cash flows.
3.22
The
apportionment methodology is defined in statute and therefore may not be
altered.
Collection Fund Adjustment
- Option 3 (REJECTED)
3.23
It is a
statutory requirement that any adjustment be calculated annually and the
committee cannot choose to take no action in relation to this decision.
|