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Changes to Council Tax / Council Tax Benefits 25 September 2012 Vic Allison Deputy Managing Director.

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Presentation on theme: "Changes to Council Tax / Council Tax Benefits 25 September 2012 Vic Allison Deputy Managing Director."— Presentation transcript:

1 Changes to Council Tax / Council Tax Benefits 25 September 2012 Vic Allison Deputy Managing Director

2 Current System of Council Tax Benefit National scheme 100% Government funded No direct payments to taxpayers, reductions to bills Government grant compensates for loss on Collection Fund No impact on taxbase £7m in Council Tax Benefits £62m in Council Tax payments Precepts out to major preceptors and town / parish councils

3 Proposed changes National scheme to be replaced by local schemes of Council Tax Support wef 1 April 2013 Local schemes to be agreed by end January 2013 Funding through general settlement based on 90% of current / recent costs We decide how to fund 10% through scheme design or funding from elsewhere Discount not benefit Will reduce taxbase for total amount of Council Tax Support

4 The funding shortfall Will be a taxbase loss of around 10% (£7m / £69m) 90% of this loss will be paid to us and major preceptors by Government We will get less in Council Tax, more in Government grant (business rates)

5 But 10% or £700k shortfall split: County72%£505,000 Police12%£85,000 Fire5%£35,000 District (inc town/parishes)11%£75,000* Total100%£700,00 * Parish element = £21,000

6 The problem with parishes Parish X has a taxbase of 1,000 in 2012/13 Will reduce to 900, following these changes Precept in 2012/13 was £20,000, Council Tax = £20.00 (£20,000/1,000) Precept in 2013/14 of £20,000, Council Tax = £22.22 (£20,000/900) Payment of grant, ie 90% would make taxbase 990, council tax = £20.20 But no Government powers to do so and far too many

7 The solution for parishes - current consultation Two taxbases, one unadjusted for benefits changes Parishes unaffected by changes to Council Tax Benefit Collection Fund carries the cost Districts get the 90% Government grant and make appropriate transfer for parishes But what about the 10% funding shortfall for parishes, equivalent to £21,000? (assuming we don’t close the funding gap via our replacement local scheme) District cost or shared with other preceptors?

8 Replacement local scheme Have to protect pensioners Other vulnerable groups? Risks of challenge Difficulty in collecting small amounts Consulting and implementing changes Proposing minimal change in year 1 Just band D limitation

9 Technical reforms to Council Tax Also 1 April 2013 Part of Local Government Finance Bill More local discretion over exemptions and discounts Will have an impact on taxbase – will increase if exemptions / discounts reduce Could be used to compensate for loss of taxbase as a result of benefits changes

10 The Year 1 numbers for Wychavon Loss from funding shortfall£700,000 Limiting support to band D-£23,000 Class C – reduce to 50%-£307,000 Second homes discount - abolish-£60,000 Class L – abolish-£28,000 New shortfall£282,000 Class C = exemption for short term (up to 6 months) empty properties, currently 100% Class L = 100% exemption for mortgagees in possession

11 What does this mean? Reduces Year 1 impact for major preceptors from £700,000 to £282,000 Beneficial impact on town / parish councils In previous example: Taxbase 1,000, precept of £20,000 Taxbase unchanged for Council Tax Benefits / Support But 0.5% uplift for other reforms to Council Tax Taxbase 1,005 Band D Council Tax £19.90 (compared to £20.00 in current year)

12 Next steps Consultation on local Council Tax Support scheme – 17 September to 26 October 2012 Please see Event for town / parish councils 21 November 2012 Consultation on parish solution closes 9 October 2012, regulations by end November 2012 Local Government Finance Act late October / early November Report to Board 27 November 2012 Council adopts proposed Council Tax Support scheme 18 December 2012 Review of local scheme for 2014/15 commences

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