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RESOLVED:
 
1. 
Recommend
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
2024/25 shall be 77,766.9 Band D equivalent properties adjusted for
non-collection. This represents an estimated collection rate of
93.5%.
 
2. 
Recommend
to Council that in accordance with The Non-Domestic Rating (Rates
Retention) Regulations 2013 Hackney’s non-domestic rating
income for 2024/25 is £179,559,273 subject to verification by
the Academy (our Revenues Software supplier) software release. This
comprises three elements.
 
· 
£66,209,106 which is payable in agreed instalments to
the Greater London Authority
· 
£54,298,802 which is retained by Hackney Council and
included as part of its resources when calculating the 2024/24
Council Tax requirement.
· 
£59,051,365 which is payable in agreed instalments to
Central Government
 
3. 
To note
that changes to the current CTRS scheme in 2024/25 were agreed by
Cabinet in December 2023.

 
4. 
Recommend
to Council that it approves a proposal to levy a council tax
premium equal to a 100% of the Council tax charge in 2024/25 on any
liable property which is unoccupied and substantially unfurnished
for a continuous period of at least one year.

 
5. 
Recommend
to Council that we signal our intent prior to 1st April 2024 that
we will levy second homes premium from 1st April
2025.
 
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 13th
December.
 
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 2024/25. 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 2023-24 was set at 92.5% but now the Council Tax and NNDR
databases are  up to date, the systems
are fully operational, and we expect a higher collection rate in
2024-25. However, the collection rate will continue to be depressed
by the cost of living crisis. It is very difficult to estimate what
the actual rate will be given the impact of this on
residents’ ability to pay which make it, as ever, more
important that we continue to provide and signpost to support where
it is needed in a timely manner to prevent arrears positions
escalating for taxpayers. Notwithstanding this we believe a
collection 93.5% is achievable and this has what we have assumed in
the taxbase calculations
 
 
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 2025/26 and
beyond, either for one-off revenue spending or the Capital
Programme. 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 2024/25, the major part of which would need to
be met from Hackney's 2025/26 Budget.
 
A
collection rate of 93.5% will result in a tax base of 77,766.9 Band
D equivalents, as shown in the table below.
 

2024/25 TAX
BASE/COLLECTION RATE

 

2024/25

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

 
83,173.1
 
93.5%
 

77,766.9

 
This compares to a tax base of 77,108.9 Band D equivalents
used in the 2023/24 budget setting.
 
Business Rates and the London Business
Rates Retention Scheme
 
In November 2023, Cabinet approved our continued
participation in the localised London business rates pooling scheme
in 2024-25. We joined the scheme in 2022-23 and continued to
participate in 2023-24. The scheme comprises the City of London and
6 other London boroughs. In 2022-23 and 2023-24, we received a
significant financial benefit, estimated to be £5.1m over the
two years; and work by the scheme’s financial advisers, LG
Futures, suggests that the 2024-25 scheme will deliver a financial
benefit of £1.6m to £2m to the Council.
 
Empty Property and Second Homes
Premiums
 
Currently the Council charges an extra amount of Council
Tax (a ‘premium’) if a property has been empty for 2
years or more - a premium equal to 100% of the annual council tax
charge on the property is added to bills on properties that have
been empty between two years and five years, and a premium of 200%
is added to bills on properties that have been empty for five
years. We have applied this discretionary power in order to
encourage owners of empty properties to bring them back into use.
An empty property is defined as a dwelling which is unoccupied and
substantially unfurnished.
 
The Levelling Up and Regeneration Act contains a provision
to amend the definition of ‘long term empty homes’ so
that, for financial years from 2024-25 onwards, dwellings
unoccupied and substantially unfurnished for a continuous period of
at least one year are liable to the council tax premium equal to a
100% of the Council tax charge on the property. This compares to
the current two year period.
 
The Council proposes to introduce this new premium in order
to further encourage owners of empty dwellings to bring them back
into use. If Cabinet approves this proposal we will be able to
charge relevant properties the premium in 2024/25.
 
It should be noted that where a property is unoccupied
following the death of the resident, the premises would be exempt
from council tax where probate or letters of administration have
not yet been granted. If the premises remain unoccupied after the
granting of probate or letters of administration a further six
months exemption can be applied.
 
There will also be potentially increased income to the
council if empty property owners still do not bring the properties
back into use.
 
The impact of introducing the 100% premium at 1 year rather
than 2 years based on current data is that 381 properties will
become liable for the premium at 1st April 2024 as opposed to 1st
April 2025 and 80 properties would become liable for the premium
during the financial year 2024/25 as opposed to 2025/26.
 
The financial impact of the 381 properties impacted as at
1st April 2024 is shown below based on the 2023/24 Council Tax
charges.
 
Band A 30 properties charge would be £2,364.40 of
which Hackney retains £1,785.54 per property (with the
balance going to the GLA) so could raise an additional
£26,783.10 to Hackney
 
Band B 102 properties charge would be £2,758.44 of
which Hackney retains £2,083.12 per property so could raise
£106,239.12 to Hackney
 
Band C 115 properties charge would be £3,152.52 of
which Hackney retains £2,380.72 per property so could raise
£136,891.40 to Hackney
 
Band D 83 properties charge would be £3,546.58 of
which Hackney retains £2,678.30 per property so could raise
£111,149.45 to Hackney
 
Band E 42 properties charge would be £4,334.72 of
which Hackney retains £3,273.48 per property so could raise
£68,743.08 to Hackney
 
Band F 7 properties charge would be £5,122.84 of
which Hackney retains £3,868.66 per property so could raise
£13,540.31 to Hackney
 
Band G 2 properties charge would be £5,910.98 of
which Hackney retains £1,785.54 per property so could raise
£4,463.84 to Hackney
 
So Hackney’s Council Tax income could potentially
increase by £467,810 in 2024-25. There are 86 council owned
properties included in the 381 properties and the cost to Hackney
for these properties would be additional £123,145 but we
would retain £92,996
 
A
further 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 await during 2024/25, further clarification from
the Government on the definition of a second home. Notice of the
intent to levy the premium must be given one year prior to the
commencement of the premium by notification in at least one local
newspaper. Therefore if we signal our intent prior to 1st April
2024 we can levy this premium from 1st April 2025.
 
Until we receive further clarity on the definition we are
unable to establish precisely how many properties this premium will
apply to. Once we have this clarity we can then advise residents of
the change from 1st April 2025 so that they can take appropriate
action if they wish to avoid the premium by selling/letting their
second home.
 
It is proposed therefore that Cabinet approves a
recommendation to levy a council tax premium equal to a 100% of the
Council tax charge in 2024/25 on any liable property which is
unoccupied and substantially unfurnished for a continuous period of
at least one year.
 
It is also proposed that we signal our intent prior to 1st
April 2024 that we will levy the second homes 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
£22.343m 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 2024-25 (on properties with an 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 2024-25.
This is discussed in 4.24 below
 
In addition to this, the Council retains a cost of
collection allowance for the administration of the collection of
business rates and for 2023-24 this allowance is
£0.616m
 
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 £76.642m.
This can be itemised as follows:
 

 

£m

Net rates yield retained by Hackney

51.135

2023/24 Surplus c/fwd.

2.54

Cost of Collection allowance

0.616

Total NNDR Income for the Year

54.299

2024/25 Retail, Hospitality, Leisure (RHL) Reliefs S31
Grant

7.385

Cost of Multiplier Cap - 2014/15 to 2024-25

11.874

Other S31 Grants

3.08

Total NNDR resources

76.642

 
It should be noted that the Government is introducing
changes to how business rates will be calculated in 2024-25. In
order to calculate a property’s rates liability before
reliefs and discounts, its rateable value is multiplied by a factor
called the multiplier, which is adjusted for inflation each year.
In 2023-24, the multiplier is 49.9p and it is applied to all
properties irrespective of the size of their rateable value.
However, as from April 2024, there will be two 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 54.4p) which means that these businesses will
be faced with an increase in their rates bills in
2024-25
 
This is a very complex change and it has taken us a
considerable amount of time to produce the necessary business rates
information for this report. This explains why this is a late
report. It should also be noted that at the time of writing this
report, we had not received a Business Rates software update from
our supplier which covers these changes. Once we receive this, we
will recalculate the estimates and if this produces materially
different results from our internal analysis, we will inform
Council and Cabinet of any changes at the meetings.
 
Council Tax Reduction Scheme (CTRS).
 
 
In December 2023, Cabinet approved changes to the current
CTRS scheme, primarily the reduction in the minimum contribution
from 15% to 10%. A report asking Council to adopt the scheme is
also on the January agenda.
 
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.