Cabinet Report |
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Report of Head of Finance Author: Vicky Johnson E-mail: Vicky.johnson@southandvale.gov.uk Wards affected: All |
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Cabinet member responsible: Pieter-Paul Barker Tel: 01189 722565 E-mail: Pieter-Paul.Barker@southoxon.gov.uk
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Council tax base 2024/25
Purpose of Report
1. The purpose of this report is to ask Cabinet to recommend the council tax base for 2024/25 to Council for approval.
Corporate Objectives
2. The calculation of the tax base is a legal requirement and an essential part of the tax setting process which helps to achieve the council’s corporate objectives.
Background
3. Before the council tax can be set by the council, a calculation has to be made of the council tax base, which is an estimate of the taxable resources for the district as a whole and for each parish area.
4. The council tax base for the district has to be notified to Oxfordshire County Council and the Police and Crime Commissioner for Thames Valley by 31 January 2024. Each parish and town council is also notified of the figure for its area.
5. The legislation requires that the council tax base is approved by full council or a non-executive body with delegated powers. No such delegation exists, so cabinet is therefore asked to recommend to council the schedule set out in Appendix A as the council tax base for the district as a whole and for each parish area.
Options - Calculation of the tax base
6. The starting point for the calculation is the total number of dwellings and their council tax band.
7. The council then allows for the following information, for each band:
(a) dwellings which will be entirely exempt so no tax is payable (e.g., those occupied entirely by students)
(b) dwellings which will attract a 25 per cent reduction (e.g., those with a single adult occupier)
(c) dwellings which will attract a 50 per cent reduction (e.g., those where all of the adult residents qualify for a reduction)
(d) dwellings which will be treated as being in a lower band because they have been adapted for a severely disabled person. The regulations provide methodology to take account of the reduction available to those in band A dwellings
(e) dwellings which will be on the valuation list but which attract discounts or disablement relief or are exempt, for only part of the year
8. Each band is then converted into "band D equivalents" by applying the factor laid down by legislation. For example, a band A dwelling is equal to 2/3 of a band D dwelling and is therefore multiplied by 2/3 to arrive at the band D equivalent figure, whilst a band H dwelling is equal to twice a Band D dwelling and is therefore multiplied by two to arrive at the Band D equivalent figure. All these are then added together to give a total of band D equivalents.
9. A final adjustment is required to allow for non-collection. The council is required to decide what its collection rate is likely to be and apply this to its council tax base. Historically the council has assumed a 98 per cent collection rate, however, it would be more appropriate for this to be set at 98.5 per cent for 2024/25. A bad debt provision of 1.5 per cent is therefore proposed for 2024/25.
Taxbase for 2024/25
10. Based on the assumptions detailed above the council tax base for 2024/25 is 62,683.2.
11. Similar calculations are required for each parish in order to calculate the proportion of the district's tax base which relates to its area. A schedule of the tax base for each parish is set out in Appendix A.
12. To calculate the council tax amounts payable per property band for the council, its council tax requirement (i.e., the amount of council tax to be raised) is divided by the Band D equivalent (tax base). This will be finalised during January and February, culminating in the council tax being set by council in February 2024 (the exact date is subject to the council being notified of the major precepting authorities’ council tax requirements).
Financial Implications
14. The future funding gap is predicted to increase to over £8.5 million by 2027/28, based on current cautious officer estimates of future funding levels. Whilst it is anticipated that overall funding for the council will remain relatively unchanged in 2024/25, the lack of certainty on future local government funding from 2025/26 onwards means the level of funding, and the resulting estimated funding gap, could be significantly different from current officer estimates in either a positive or negative way. Every financial decision, particularly those involving long-term funding commitments (i.e. those beyond 2024/25), needs to be cognisant of the potential for significant funding gaps in future years.
Legal Implications
15. These are set out in the body of the report.
Climate and ecological impact implications
16. There are no direct climate and ecological implications arising from this report
Equalities implications
17. The calculation of the tax base is a legal requirement and there are no equalities implications with this process.
Risks
18. The council’s methodology for calculating the tax base involves basing the calculation on actual dwellings at a certain point in time, rather than forecasting on potential new dwellings that may be built in the future. Because of this the risk exposure is considered to be low.
Other Implications
19. n/a
Conclusion
20. As covered above, the calculation of the tax base is a legal requirement and it is asked that Cabinet recommends the council tax base for 2024/25 to Council for approval in accordance with Appendix A.
Background Papers
None
