2021-22 local financial returns (LFRs) - guidance notes

14. LFR 12: Council Tax Income Account

Information relating to local authorities' Council Tax Income Account should be recorded in LFR 12. All figures should be presented on a levied basis, unless otherwise specified. The following costs should not be included here, and should instead be recorded in LFR 09:

• collection of Council Tax;
• administration of rebates;
• discounts for prompt payment, where offered;
• late payments or other penalties.

Gross Council Tax (Row 7): Record here the gross Council Tax levied before any discounts, reliefs, exemptions and provisions against doubtful debts / non-payment. This figure should include any arrears of local tax collection.

Additional Council Tax income (Row 8): Record here the additional income in relation to the following:

• reducing the discount on second homes from 50% to 0%;
• reducing the discount on long-term empty properties from 50% to 0% or applying an increase.

Income arising from penalties (Row 9): For example for non-disclosure of the person liable to pay tax or penalties arising from a summary warrant being approved.

Contributions in respect of Class 17 and 24 dwellings (Row 10): Include armed forces accommodation and dwellings where crown immunity applies.

Council Tax Reduction (Row 13): Record here the total value of Council Tax Reduction (CTR) awarded under the CTR scheme (Council Tax Reduction (Scotland) Regulations 2012, Council Tax Reduction (State Pension Credit) (Scotland) Regulations 2012).

Discounts (Row 14): Record here the total value of discounts given as covered by The Local Government Finance Act 1992, Section 79(1) and 79(2). This includes the 25% Single Person Discount and 50% discount for second homes and long-term empty properties.

Exemptions (Row 15): Record here the total reduction relating to exempt properties, in accordance with The Council Tax (Exempt Dwellings) (Scotland) Order 1997 (SSI 1997/728). This includes halls of residences; dwellings occupied by students; dwellings awaiting demolition; repossessed dwellings and empty dwellings.

Disabled Relief (Rows 16): Record here the total reduction relating to disabled relief given by the authority, in accordance with The Council Tax (Reductions for Disabilities) (Scotland) Regulations 1992 (SSI 1992/1335).

Provisions Against Doubtful Debts (Row 17): Record here the local authority's provision for property tax doubtful debts.

Net residual adjustments to Council Tax income during the year (Row 18): This will include arrears of Council Tax recovered; arrears of community charge recovered; and redetermination of prior years.

14.1 Memorandum Account (Rows 28 to 42)

Local authorities have discretion to reduce the Council Tax discount on second homes and long-term empty properties to between 10% and 50% as per The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 (SSI 2013/45 as amended). The additional income generated from this reduction in discount is retained locally and must be used for the provision of new-build affordable social housing to meet locally determined priorities. The additional income can be used on the council's own social housing stock, or paid as grant to Registered Social Landlords (RSLs).

This section collects all income recognised in the Council Tax income account arising from the reduction in discounts to a minimum of 10%, and all expenditure recognised as being funded from this income. The 2013 guidance on Council Tax on second homes and long-term empty properties advises proper accounting practices, i.e. on a levied basis, but also references actual amounts collected.

This has led to local authorities taking different approaches in how this income and expenditure is recorded. Local authorities are asked to complete this section on the same basis as their annual accounts. Where the figures are provided on a levied basis, local authorities are asked to split the balance held on this account between cash held and amounts not yet collected in Rows 41 and 42 respectively. Where the figures provided are on a cash basis, the split will just show the full balance as cash held and Row 42 will be zero.

Please note, these figures should be independent of billing years and so will not match the information provided on the Council Tax Revenue Return, which collects data on a billing year basis.

Balance brought forward 1 April (Row 29): Record here the balance of income set aside for affordable housing that has been brought forward at the start of the financial year.

Additional Council Tax income from reducing discount on second homes to between 50% and 10% (Row 30): Record here additional income relating to reducing the discount on second homes from 50% to a minimum of 10%.

Additional Council Tax income from reducing discount on long-term empty properties to between 50% and 10% (Row 31): Record here additional income relating to reducing the discount on long-term empty properties from 50% to a minimum of 10%.

Interest on unspent monies (Row 32): Record here interest allocated to this Memorandum Account (earmarked reserve) based on the balance held in this account.

Expenditure on Affordable Housing - HRA Capital Expenditure (Row 34): Record here expenditure on affordable housing recorded as HRA capital expenditure that has been funded by the additional Council Tax income.

Expenditure on Affordable Housing - HRA Revenue Expenditure (Row 35): Record here expenditure on affordable housing recorded as HRA revenue expenditure that has been funded by the additional Council Tax income.

Expenditure on Affordable Housing - Registered Social Landlords (RSLs), other organisations or individuals (Row 36): Record here amounts paid to RSLs, other organisations or individuals for affordable housing that has been funded by the additional Council Tax income.

Amount carried forward for affordable housing (Row 38): Automatically calculates the amount carried forward for affordable housing, i.e. the amount earmarked in reserves. The amount calculated here must be equal to the earmarked reserve amount as per the accounts and recorded in LFR 23, Row 78. This condition is validated in Cell E38 and LFR 23, Cell M78.

The amount that has been collected (Row 41): Record here the amount of additional Council Tax Income to be carried forward and earmarked in reserves that has been collected, i.e. cash received.

The amount not yet collected (Row 42): This figure is automatically calculated based on Row 41. It reflects the remaining amount to be carried forward as amounts not yet collected, i.e. still recognised as a Council Tax debtor. Where a local authority has completed the Memorandum Account on a cash basis, this balance should be zero.

14.2 Other Additional Council Tax Income (Rows 44 to 46)

These lines capture information on additional Council Tax income relating to second homes / long-term empty properties which is general in nature (i.e. not ring-fenced) and may be spent as local authorities determine. Figures should be provided on the same basis as those in the memorandum account section.

Additional Council Tax income from reducing discount on second homes from 10% to 0% (Row 45): Record here additional income relating to reducing the discount on second home from 10% to 0%.

Additional Council Tax income from reducing discount on long-term empty properties below 10% (including 0%) or applying an increase (Row 46): Record here additional income relating to reducing the discount on long-term empty properties below 10% (including to 0%) or applying an increase in amount charged.