Agenda item

To consider a report which gives an explanation of how the North Tyneside Council Tax Base for 2020/21 has been calculated and requests approval for the calculation of the Authority’s Council Tax Base for 2020/21.

Cabinet considered a report which provided an explanation of how the proposed North Tyneside Council Tax Base for 2020/21 had been calculated and requested approval of the calculation for 2020/21.

The 2020/21 Council Tax Base was based on the North Tyneside Council Local Council Tax Support Scheme remaining at the same level as had been set in 2019/20.

The detailed Council Tax Base calculation for North Tyneside for 2020/21 was attached as Appendix A to the report, together with an explanation of the specific elements that formed part of the calculation. Within the calculation, adjustments had been made to reflect the effect of exempt properties, disabled relief and discounts. Applying the adjustments had the effect of reducing the total number of properties to a common base for each band, in terms of full year equivalents.

The Council Tax Base Regulations ensured that the Council Tax Base for an area took into account the effect of disability reductions in respect of dwellings which fell within Band A. They had introduced an additional ‘alternative valuation band’ to allow Band A properties to qualify for a disabled reduction. Previously, properties adapted to meet the needs of a disabled person were charged at a rate equal to the next lowest valuation band, so for example a qualifying B and D property would be charged at a Band C rate, but this had not applied to Band A properties. Instead of paying the normal Band A charge (six-ninths of the Band D) a qualifying Band A property was now charged five-ninths of the Band D charge. For the purpose of the Council Tax Base calculation it was now necessary to show Band A properties which qualified for a disabled reduction as if it were an additional valuation band.  Deductions were then made for exempt dwellings and the estimated impact of the Council Tax Support scheme for 2020/21.

In order to arrive at the Council Tax Base calculation for 2020/21, the number of dwellings within each of the Council Tax Bands A–H had been converted to their Band D equivalents, using the appropriate proportions.  The result of this calculation for 2020/21 was to produce a total number of properties prior to an allowance for non-collection and contributions in lieu of 62,761.

The next stage of the Council Tax Base calculation involved making a deduction for the non-collection of Council Tax. This non-collection element of the calculation was made in respect of the amounts that were legally due, but which, for varying reasons, may not be collected. The assumed Council Tax collection rates for North Tyneside had improved significantly since 1993/94, when the assumed collection rate was 95%. The assumed North Tyneside Council Tax collection rates for each year from when Council Tax had been introduced in 1993/94 were detailed in the report.

A fundamental issue for the Council Tax Base calculation was the assumed percentage Council Tax collection rate to apply.  The Authority’s performance on Council Tax collection had been improving for many years, reaching a peak of 99.20% in setting the Council Tax Base for 2012/13. However, since 2013/14, a lower collection rate of 98.50% had been proposed and agreed. This lower rate of 98.50% was set to reflect the estimated impact of the Council Tax Support Scheme, the estimated impact of other Welfare Reform changes and changes to Exemptions and Discounts applied from 2013/14.

Council Tax in-year collection remained steady and had remained consistent in each of the last four financial years. This was only however an approximate indicator of the assumed council tax performance, given the significant time lag effect between in-year and ultimate council tax collection performance.

Having considered various issues in relation to the collection rate for 2020/21, which were detailed in the report, it was proposed that an assumed Council Tax Collection Rate of 98.50% be set as part of the 2020/21 Council Tax Base calculation. This was felt prudent as the risk of setting a Council Tax collection rate too high was that this could result in a deficit position for the Council Tax element of the Collection Fund, which in turn would have to be funded by the Authority’s General Fund. This calculation was reviewed on an annual basis.

The final stage of the Council Tax Base calculation involved adding an estimated amount in respect of contributions in lieu of Council Tax to be made to the Authority, which was expressed in terms of the number of Band D equivalent properties. For 2020/21 this figure for North Tyneside Council which related to Ministry of Defence properties was 50 Band D equivalent properties.

The 2020/21 Council Tax Base for the whole of North Tyneside after the allowance for non-collection and payments in lieu was 61,870 Band D equivalent properties.  This equated to an increase of 1,691 Band D equivalent properties compared to the 2019/20 figure. 

Cabinet considered the following decision options:

Option 1 - Whilst the annual Council Tax Base calculation was a statutory calculation, there was always discretion to amend the assumed Council Tax collection rate each year, based on experience and actual / anticipated collection rates. Changes to exemptions, discounts, premiums and the Local Council Tax Support Scheme could also be made. Such changes were reserved to full Council for a decision. The Local Council Tax Support Scheme for 2020/21 would remain at the level set in 2019/20. Option 1 was:

•         Setting the 2020/21 Council Tax Base for North Tyneside Council using an assumed council tax collection rate of 98.50%;

•         Noting the Council Tax Support Scheme.

Option 2 - The only available options for Cabinet, following the Authority’s decision to leave the Local Council Tax Support scheme at the same level as 2019/20, were options to amend the assumed Council Tax collection rate. The current collection rate of 98.50% was proposed to remain unchanged for 2020/21. An increase in the collection rate would increase the Council Tax Base and a reduction in the collection rate would reduce the Council Tax Base. The impact of different Council Tax collection rates was shown in Table 3 below. For 2020/21 each 0.1% change to the collection rate would change the Council Tax Base by approximately 63 Band D equivalent properties which would equate to a change in resources of approximately £0.0988m.

Resolved that the report on the calculation of North Tyneside’s Council Tax Base for 2020/21 be noted; and the assumed Council Tax collection rate for 2020/21 remain at 98.50% and therefore the amount calculated by North Tyneside Council as its Council Tax Base for 2020/21 shall be 61,870 Band D equivalent properties.

(Reasons for decision: The proposed 98.50% Council Tax collection rate is felt to be prudent for the reasons set out in paragraph 1.5.14 of the report. The risk of setting a Council Tax collection rate too high is that this can result in a deficit position for the Council Tax element of the Collection Fund, which in turn will have to be funded by the Authority’s General Fund. This

collection rate is reviewed as part of the annual Council Tax Base calculation, and the 98.50% collection rate will be reviewed in determining the Council Tax Base for 2020/21.)