Issue details
Business Rates Forecast 2021/22
The authority is required under paragraph 40
of schedule 1 to the Local Government finance Act 2012 to make
calculations, and supply information on their anticipated
collectable business rate income for the following year. This
report sets out the calculations and seeks approval by the
Council’s Chief Financial Officer. These figures will form
part of the funding in relation to the Council’s 2021/22
budget.
The Local Government Finance Act 2012 amended the 1988 Local
Government Finance Act to give local authorities the power to
retain a proportion of funds obtained from business rates collected
in their area.
The Department for Housing, Communities and Local Government
guidance requires each billing authority should formally set a
Business Rate baseline each year. This baseline will be the
authority’s estimate of the business rates it forecasts to
collect in the following financial year, net of any reductions such
as reliefs and the estimated cost of appeals.
The Government introduced pilot schemes in 2017/18 in advance of
permanent reforms to business rate retention later in the
parliament. Initially only authorities with signed devolution deals
were eligible to participate in a pilot in 2017/2018. The pilot for
the West of England (WoE) commenced in 2017/2018 and includes Bath
& North East Somerset Council, Bristol City Council, South
Gloucestershire Council and the West of England Combined
Authority.
The 100% pilot gives the WoE the opportunity to retain 100% of any
business rates growth over the next year, with no downside
financial risk when compared to remaining in the national system.
It also gives the WoE the opportunity to help shape the national
scheme.
In line with the Government’s stated intention for the
reforms to the Business Rate Retention system, authorities
participating in a pilot will not have to pay a Levy on growth
above their Retained Income target and will retain an increased
Local Share of Non-Domestic Rating Income and sums due from
Government paid via Section 31 grant. The Pilot includes the
rolling in of the Revenue Support Grant with WECA receiving a small
share of the business rates to reflect the rolling in of the DfT
Integrated Transport Block and Highways Maintenance Capital Grants;
this is shown in Table 1 below.
In line with the approval process for the Council Tax Base, the
decision on the Business Rate forecast is delegated to the
Council’s Chief Financial Officer. The Ministry of Housing,
Communities &
Local Government requires the council to submit details of its
forecast through a statutory return called the NNDR1. This return
must be submitted by 31st January 2021.
The estimated business rate income for 2021/22 is £65.667m;
of this the Council retains £22.115m after the tariff payment
to the Government is taken into account. A breakdown is shown in
Table 1 below.
Table 1 Business Rate Distribution
Anticipated Business Rate Distribution 2021/22
£m
Bath & North East Somerset Council Business Rate Income (Total
business rates collected after deductions) 65.667
Central Share to Government 0.000
5% Share to WoE Combined Authority (3.283)
1% Share to Avon Fire Authority (0.657)
Deductions for Tariff (39.612)
Bath & North East Somerset Council estimated retained Business
Rates 22.115
In past years, the Government has announced a series of measures
that continue to affect the business rates income of Local
Authorities in 2021/22. These changes were:
i. Capping the increase in the business rates multiplier at CPI
instead of RPI with effect from 1 April 2018.
ii. Freezing of the business rates multiplier in 2021/22.
iii. Capping the increase in the business rates multiplier at 2% in
both 2014/15 and 2015/16 (rather than it increasing in line with
September RPI increases of 3.2% and 2.3%).
iv. A Supporting small business rates relief scheme to support
those rate payers who lost all or some of their small business or
rural rate relief due to revaluation.
v. The doubling of Small Business Rate Relief made permanent from
1st April 2017 with changes to eligibility thresholds.
vi. The doubling of rural rate relief to be awarded through
discretionary relief until such time as the Government can make the
necessary changes to primary legislation.
All the above measures will be compensated through payment of a
section 31 grant. The Council has estimated the impacts of these
reliefs and has included the estimate of grant income in its
2021/22 budget.
The Council’s budget for 2021/22 also reflects transactions
relating to the business rate pooling arrangements within the West
of England City Region Deal agreement. These arrangements have been
set out in previous budget reports.
The Section 151 Officer is required to estimate the amount of any
surplus or deficit on the Collection Fund relating to Business
Rates as at 31st March 2021. This must be done by the 31st January
2021, and this report also asks the Director of Finance to approve
the balance projected related to Business Rates.
As a result of pressures associated with the Coronavirus pandemic,
and the potential for authorities to estimate larger-than-normal
deficit on the 2020-21 Collection Fund, the Government has
introduced legislation to allow authorities to spread certain
elements of the estimated deficit on the 2020-21 Collection Fund
over the three years 2021-22 to 2023-24.
After calculations of current year collection and adjustments to
the business rate base in 2020/21, including making provision for
appeals, it is estimated that the 2020/21 collection fund account
position relating to business rates will be in deficit by
£42.973m (after adjustment of £1.975m for the 3 year
spread allowance). The deficit will be shared between the Council,
WECA and Avon Fire Authority in line the 100% pilot shares. The
Council’s share of the deficit to be recovered in 2021/22 is
£40.394m.
The 2020/21 Council’s share of the estimated deficit includes
£39.147m which relates to the extended retail relief, which
was introduced by government after the 2020/21 budget was set. The
s31 compensation grant in respect of this change is to be received
in 2020/21 and will be transferred to the Business Rates Reserve so
it is available in 2021/22 to offset recovery of this element of
the deficit.
£1.975m of the deficit is budgeted for recovery in 2022/23
and 2023/24 in line with the Local Authorities (Collection Fund:
Surplus and Deficit) (Coronavirus) (England) Regulations 2020 (SI
2020/1202). The Council’s share is £1.857m.
The overall position of the forecast 2021/22 business rate income
and the forecast 2020/21 deficit on the collection fund have been
taken into account in the overall Council’s budget proposal
which will be presented to Council on the 23rd February 2021.
Decision type: Key
Reason Key: Affects more than 1 ward;
Decision status: Approved
Notice of proposed decision first published: 26/02/2021
Decision due: 15 Jan 2021 by Director Finance - Section 151 Officer
Contact: Andy Rothery, Chief Finance Officer (S151) Email: andy_rothery@bathnes.gov.uk Tel: 01225 477103.
Decisions
- 26/02/2021 - Business Rates Forecast 2021/22