Local Ratepayer Valuation Forums ODPM update

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Local Ratepayer Valuation Forums ODPM update

• July 2004

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ODPM update

• Revaluation 2005 overall effects
• Transition 2005
• Small Business Rate Relief
• Balance of Funding Review

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Revaluation 2005 overall effects

• Total rateable value up 17.9 in England
• Overall tax take remains constant (before
  inflation)
• About 40 of properties will have increased bills
  following revaluation
• Up to 60 of properties will see a reduction in
  their rates bills from 2005
• Based on assumption of multiplier of 41.5p (plus
  inflation - to be confirmed) down from 45.6p in
  04/05

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Transitional Arrangements
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Transition arrangements

• ODPM made clear that scheme would be self
  financing and work through within five years
• Announcement on 21 July confirmed a four year
  scheme funded by downward phasing caps on
  reductions (as previous schemes).
• Funding via supplement rejected.
• Consultation on detailed proposals to run from
  August into October.

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Transition arrangements upward caps
Larger properties 2005/06 12.5 2006/07 17.5 20
07/08 20 2008/09 25 2009/10 Full
Small properties 2005/06 5 2006/07
7.5 2007/08 10 2008/09 15 2009/10 Full
(under 21,500 in London, 15,000 elsewhere)
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Transition arrangements downward caps
Larger properties 2005/06 7 2006/07 10 2007/0
8 17.5 2008/09 20 2009/10 Full
Small properties 2005/06 17.5 2006/07
25 2007/08 45 2008/09
50 2009/10 Full (under 21,500 in London,
15,000 elsewhere)
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Transitional Relief 2005 - example

• A property outside London with a 2000 rates bill
  in 04/05, and a new RV of 10,000 from 1/4/05.
• Without transition the new bill would have been
  4150 (10,000 x 41.5p)
• With transition the bill would be
• Annual bill (04/05)
  2000.00
• Maximum increase (5)
  100.00
• New bill (2005/06)
  2100.00 (plus inflation)

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Transition through to 2010

• A property outside London with a 2000 rates bill
  in 04/05, and a new RV of 10,000 from 1/4/05
• (Full annual liability) (4150)
• 2000/01 5 2100.00
  
• 2001/02 7.5 2257.50
• 2002/03 10 2483.25
• 2003/04 15 2855.74
• 2004/05 Full 4,150.00
• Note inflation not applied.

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Small Business Rate Relief
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Small Business Rate Relief Scheme (original
proposals)

• Applications were required by 31 December before
  the rate year for which relief was sought
• Original proposals applied to businesses with
  single property and rateable value below 8,000
• 50 rate relief at 3,000 rateable value and
  below. Tapering off by 1 for each 100 rateable
  value above that figure.
• Funded by supplement of all other ratepayers
  outside the scheme

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Small Business Rate Relief Scheme (new proposals)

• Scheme will now apply to properties with rateable
  values up to 10,000 provided they meet the other
  scheme criteria (i.e. they occupy one property
  only).
• 50 rate relief will apply to qualifying
  properties with RV of 5,000 and below.
• Tapering off by 1 for each 100 above 5,000.
• 40 at 6,000 RV
• 30 at 7,000 RV
• 20 at 8,0000RV

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Small Business Rate Relief Scheme (new proposals)

• Scheme will now incorporate a buffer zone, in
  which occupiers would not receive relief but
  would not pay the supplement either.
• Buffer zone will apply to occupiers of properties
  with rateable values between 10,000 and 15,000
  who meet the other scheme criteria but are
  outside the 10,000 threshold.
• applications may be made up until six months
  after the financial year for which rate relief is
  sought.

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Small Business Rate Relief Scheme (new proposals)

• Estimated that around 400,000 businesses will
  qualify for rate relief
• Around a further 55,000 will fall in the buffer
  zone
• Costs to other larger businesses estimated at
  1.6 on rates bills
• Eight week consultation period to follow.

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More information.

• is available on the ODPM website.
• Full statement by Nick Raynsford is available at
• http//www.odpm.gov.uk/stellent/groups/odpm_about/
  documents/page/odpm_about_029858.hcsp
• Press Releases are available at
• http//www.odpm.gov.uk/pns/newslist.cgi

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Balance of Funding Report
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Balance of Funding

• Balance of Funding Report published on 20 July
  2004
• Report concluded that
• Council tax should be retained but reformed if
  acceptable means of reform are available
• Strong arguments in favour of shifting balance of
  funding towards more local funding, if methods
  are feasible and desirable
• Further independent inquiry to take place

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Balance of Funding

• Inquiry to report by end-2005 and will
• Make recommendations for reform of council tax
  (taking account of 2007 revaluation)
• Assess the case for local authorities having more
  flexibility to raise additional local revenue
  (with less raised centrally)
• Consider other options such as local income tax,
  reform of business rates, other local taxes and
  charges
• Consider implications for financing of possible
  Elected Regional Assemblies
• Consider any implications recommendations have
  for other parts of the UK.