Decision Maker:

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Date of Decision: January 27, 2025

Purpose:

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.