Content

RESOLVED:
 
1. 
Recommended to Council that, in accordance with the
Local Authorities (Calculation of Council Tax Base) (England)
Regulations 2012, the amount calculated by Hackney Council as its
Council Tax Base for 2025/26 shall be 78,754.1 Band D equivalent
properties adjusted for non-collection. This represents an
estimated collection rate of 94%.
 
2. 
Recommended to Council that in accordance with The
Non-Domestic Rating (Rates Retention) Regulations 2013
Hackney’s non-domestic rating income for 2025/26 is forecast
to be £208,868,663. This comprises three elements.
 
· 
£77,052,987 which is payable in agreed
instalments to the Greater London Authority
· 
£63,092,743 which is retained by Hackney Council
and included as part of its resources when calculating the 2025/26
Council Tax requirement.
· 
£68,722,933 which is payable in agreed
instalments to Central Government
 
3. 
It was noted that the current CTRS scheme will not be
changed in 2025/26
 
REASONS FOR DECISION
 
Council Tax Base
The rules for calculating the Council Tax Base
are set out in the Local Authorities (Calculation of Council Tax
Base) (England) Regulations 2012. The calculation is based on the
valuation list and other information available on 31 December
2024.
 
Firstly, the authority must estimate the
number of properties in each band after allowing for exempt
properties. These figures are also adjusted to allow for discounts
(e.g. single person discount and Council Tax Reduction Scheme),
exemptions and the impact of applying regulations which allow the
Council to charge additional Council Tax to the owners of empty
homes and second homes. A formula is then used to calculate the
total number of Band D equivalent properties. This gives a higher
weighting to properties in Bands above Band D and a lower weighting
to properties in bands below Band D. This can therefore be thought
of as the average number of properties liable to pay Council Tax.
The calculation is set out at Appendix 1.
 
The Authority then must estimate what
percentage of the total Council Tax due for the year it will be
able to collect. This is usually referred to as the collection
rate. This percentage is then applied to the total number of Band D
equivalent properties to give the tax base to be used for setting
the Council Tax. Another way of considering the tax base is that it
represents the amount of Council Tax income that will be received
from setting a Band D Council Tax of £1.
 
There are a number of factors to be considered
when assessing the likely collection rate for 2025/26. Collection
rates since 2020/21 have been adversely affected by the Covid-19
pandemic, the cyber attack and latterly
by the cost of living crisis. The collection rate for council tax
in 2024-25 was set at 93.5% but now we expect a higher collection
rate in 2025-26 of 94%. This is approaching our pre Covid collection rate of 95%.
 
 
If actual collection in the forthcoming year
exceeds the budgeted collection rate this could generate a surplus
in the Collection Fund which would provide additional one-off
resources available for use in 2026/27. If on the other hand, the
collection rate set is over-optimistic, this may result in a
deficit on the collection fund at the end of 2025/26, the major
part of which would need to be met from Hackney's 2026/27
Budget.
 
A collection rate of 94% will result in a tax
base of 78,754.1 Band D equivalents, as shown in
the table below.
 

2025/26 TAX BASE/COLLECTION RATE

 

2025/26

Aggregate of Band D
Equivalents
Estimated Collection
Rate
Tax
Base (Band D Equivalents)

83,780.9
94.0%

78,754.1

 
This compares to a tax base of 77,766.9 Band D
equivalents used in the 2024/25 budget setting.
 
Business Rates and the London Business Rates
Retention Scheme
In November 2024, Cabinet approved our
continued participation in the localised London business rates
pooling scheme in 2025-26. We joined the scheme in 2022-23 and
continued to participate in 2023-24 and in 2024-25. The scheme
comprises the City of London and 6 other London boroughs. We have
received a significant financial benefit, estimated to be
£6.3m in 2022-23 and 2023-24, and the latest estimate of our
2024-25 allocation by the Pool’s financial advisers, LG
Futures, is £2m. This suggests that the scheme could deliver
a financial benefit of c. £2m in 2025-26
 
Second Homes Premiums
A provision of the Levelling Up and
Regeneration Act allows, through an amendment to the Local
Government Finance Act 1992, councils in England to levy a Council
Tax Premium of up to 100% on second homes. We signalled our intent
prior to 1st April 2024 to levy the Premium (following Cabinet
approval in January 2024) and so we will be levying this premium
from 1st April 2025.
 
NNDR Estimates, Reliefs and Special Grants
In past national budgets, the Government has
announced various rate reliefs for all businesses, in particular
the significant retail, hospitality and leisure (RHL) sector
reliefs. Hackney, in common with all Councils, will receive
compensation for these reliefs.
 
It is estimated that Hackney Council will
receive £20.195m in s31 grants in
compensation for the reliefs given in previous and current Autumn
Statements and National Budgets, and from the impact of other
current and past Government policies. The grants are primarily in
respect of reliefs we award for Small Businesses; Retail,
Hospitality and Leisure; and Transitional Payments. We also get a
s31 grant to compensate us for the fact that the Government did not
increase the business rates multiplier in line with inflation in
2025-26 (on properties with a rateable value of below £51k)
and in prior years. It did though increase the multiplier applied
to properties with an rateable value of
more than £51k in line with inflation in 2025-26. This is
discussed in 4.15 below.
 
In addition to this, the Council retains a
cost of collection allowance for the administration of the
collection of business rates and for 2025-26 this allowance is
£0.617m
 
The total resources available to the Council
in respect of Non-Domestic Rates and to be included in the budget
to be approved by Council in March will therefore be an estimated
£83.288m. This can be itemised as
follows:
 

 

£m

Net rates yield retained by
Hackney

55.222

2024/25 Surplus
c/fwd.

7.254

Cost of Collection
allowance

0.617

Total
NNDR Income for the Year

63.093

2025/26 Retail, Hospitality,
Leisure (RHL) Reliefs S31 Grant

4.485

Multiplier Cap Grant - 2014-15
to 2025-26

12.519

Other S31 Grants

3.191

Total
NNDR resources

83.288

 
As in 2024-25, there will be two business
rates multipliers. The first remains at 49.9p and this will apply
to all properties classed as ‘small’, i.e. with a
rateable value of £51k or below. An inflation uplift
therefore, will not be applied to the multiplier for these
properties and so the ratepayers will not face any increase in
their bills (assuming that there is no change to their discounts or
reliefs) and the Council will receive S31 grant to compensate for
our loss of income. However, an inflation uplift will be applied to
the multiplier of properties with a rateable value of more than
£51k (taking the multiplier up to 55.5p) which means that
these businesses will be faced with an increase in their rates
bills in 2025-26.
 
Council Tax Reduction Scheme (CTRS)
There will be no changes to the current scheme
in 2025-26
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED
 
The requirement to calculate the Council Tax
base and business rates has been laid down by Statute. As such,
there are no alternatives to be considered.