Localising Council Tax Support: Calculation of the Council Tax Base
The Local Authorities (Calculation of Council Tax Base) Regulations 2012, (SI:2012/2914), allows for new item Z at paragraph (1) of regulation 4.
Item Z allows for a reduction in the tax base for “amount that the authority estimates will be applied pursuant to the authority’s council tax reduction scheme in relation to the band, expressed as an equivalent number of chargeable dwellings in that band”.
It is for billing authorities to determine how to reduce their council tax base to take account of local council tax support schemes. This note provides a possible starting point.
To arrive at the total value number of dwellings to be removed from the council tax base as a result of local council tax reduction schemes a billing authority could, for the following year, estimate the total amount of reductions granted in each band and divide that figure by the estimated council tax bill for the band.
Example:
· The total cash value reductions for band D is estimated by the billing authority at £27,000
· Band D council tax bill is estimated to be £1,350
· Therefore estimated number of dwellings removed from the council tax base is 27000 / 1350 = 20 dwellings.
In this example, the billing authority is, in effect, forgoing revenue collection equivalent to the full council tax that would be paid by 20 dwellings.
The regulations allow for an estimate, rather than a defined formula as is allowed for the single person discount. The is because it is likely that a significant proportion of reductions under a local support schemes will be means-tested and it will not be possible to apply a set percentage equally applied to all properties in receipt of a reduction, as is the case with certain other existing discounts.
Calculating the number of dwellings to be removed from the tax base, as in the example above, may be relatively straight-forward, but this does require an estimate to made of the total number of reductions and eventual bill, which are likely to be more complex.
This is because, calculating the individual bill requires the tax base to be calculated, while under this approach, the tax base cannot be calculated until some assessment is made of the number of persons eligible for support, the level support, and the eventual bill.
In relation to the amount of reductions that may be granted, from the consultation processes and internal work undertaken in regard to costs of local schemes, a billing authority should be able to estimate the likely amount of reductions that may be applied across their area.
In regard to the eventual estimate of the end bill a billing authority may have to estimate the likely bill that will be issued, including, where appropriate, the likely preceptors’ elements.
A starting point could be the previous year’s bill and billing authorities may need to engage with their precepting authorities on this issue, and also consider the impacts of announcements on issues such as the council tax freeze and excessiveness principles, for changes in the level of the underlying liability.
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