General

18 Interpretation

In this Act—

• “financial year” means a period of 12 months beginning with 1 April;

• 5“the LGFA 1988” means the Local Government Finance Act 1988;

• “the LGFA 1992” means the Local Government Finance Act 1992.

19 Power to make transitional, consequential etc provision

(1) The Secretary of State may by order made by statutory instrument make such
transitory or transitional provision, or savings, as the Secretary of State
10considers appropriate in connection with the coming into force of any
provision of this Act.

(2) The Secretary of State may by order made by statutory instrument make such
consequential provision (including provision amending, repealing or revoking
any legislation passed or made before, or in the same Session as, this Act) as the
15Secretary of State considers appropriate in connection with any provision of
this Act.

(3) A statutory instrument containing an order under subsection (2) that amends
or repeals any of the following may not be made unless a draft of the
instrument has been laid before, and approved by a resolution of, each House
20of Parliament—

(a) an Act of Parliament;

(b) an Act of the Scottish Parliament;

(c) an Act or Measure of the National Assembly for Wales;

(d) Northern Ireland legislation as defined in section 24 of the
25Interpretation Act 1978.

(4) Any other statutory instrument containing an order under subsection (2) is
subject to annulment in pursuance of a resolution of either House of
Parliament.

(5) The powers under subsections (1) and (2) include power to make different
30provision for different cases or descriptions of case, including different
provision for different areas or different authorities.

20 Financial provisions

There is to be paid out of money provided by Parliament—

(a) any expenditure incurred by the Secretary of State in consequence of
35this Act, and

(b) any increase attributable to this Act in the sums payable under any
other Act out of money so provided.

21 Extent and short title

(1) This Act extends to England and Wales only, subject to subsections (2) and (3).

(2) 40Section 16 extends also to Scotland.

(3) Sections 17 and 19 extend to England and Wales, Scotland and Northern
Ireland.

(4) This Act may be cited as the Local Government Finance Act 2012.

SCHEDULES

Section 1

SCHEDULE 1 Local retention of non-domestic rates

After Schedule 7A to the LGFA 1988 insert—

Section 59A

“Schedule 7B 5Local retention of non-domestic rates

Part 1 Main non-domestic rating accounts

Main non-domestic rating accounts

1 (1) The Secretary of State must, for each year, keep an account, to be
10called a “main non-domestic rating account”.

(2) Each such account must be kept in accordance with the provisions
of this Schedule that apply to a main non-domestic rating account.

(3) The Secretary of State—

(a) must keep each such account in such form as the Treasury
15may direct, and

(b) must, at such time as the Treasury may direct, send copies
of each such account to the Comptroller and Auditor
General.

(4) The Comptroller and Auditor General—

(a) 20must examine, certify and report on any account of which
copies are sent to the Comptroller and Auditor General
under sub-paragraph (3), and

(b) must arrange for copies of the account and of the
Comptroller and Auditor General’s report on it to be laid
25before each House of Parliament.

Credits and debits

2 (1) For each year the following are to be credited (as items of account)
to the main non-domestic rating account kept for the year—

(a) amounts received by the Secretary of State in the year
30under section 54 (central rating: liability),

(b) amounts received by the Secretary of State in the year
under section 59 (contributions in aid),

(c) amounts received by the Secretary of State in the year
under regulations under section 99(3) (treatment of
surplus or deficit in collection fund) that make provision in
relation to non-domestic rates,

(d) 5amounts received by the Secretary of State in the year
under paragraph 6 (payments in respect of the central
share) and amounts received by the Secretary of State in
the year under regulations under paragraph 7
(administrative arrangements for such payments),

(e) 10amounts received by the Secretary of State in the year
under paragraph 14 (payments following local
government finance report),

(f) amounts received by the Secretary of State in the year
under paragraph 17 (payments following amending
15report), and

(g) amounts received by the Secretary of State in the year
under regulations under paragraph 33 (transitional
protection payments).

(2) For each year the following are to be debited (as items of account)
20to the main non-domestic rating account kept for the year—

(a) payments made by the Secretary of State in the year under
regulations under section 99(3) that make provision in
relation to non-domestic rates,

(b) payments made by the Secretary of State in the year under
25regulations under paragraph 7,

(c) payments made by the Secretary of State in the year under
paragraph 14,

(d) payments made by the Secretary of State in the year under
paragraph 17, and

(e) 30payments made by the Secretary of State in the year under
regulations under paragraph 33.

(3) If a local government finance report for a year has been approved
by resolution of the House of Commons, an amount may be
debited (as an item of account) to the main non-domestic rating
35account kept for the year, for use for the purposes of local
government in England.

(4) The amount that may be debited under sub-paragraph (3) for a
year may not exceed—

(a) the total amount credited for the year under sub-
40paragraph (1)(a), (b), (c) and (d), minus

(b) the total amount debited for the year under sub-paragraph
(2)(a) and (b).

(5) The reference in sub-paragraph (3) to use for the purposes of local
government in England includes the making of payments under
45an Act or an instrument made under an Act (whenever passed or
made) to—

(a) billing authorities in England,

(b) precepting authorities in England,

(c) levying bodies in England (and for this purpose “levying
50body” has the meaning given by section 74(1)), or

(d) bodies to which section 75(1) applies.

End of year calculations

3 (1) As soon as is reasonably practicable after the end of each year, the
Secretary of State must calculate—

(a) 5the aggregate of the items of account credited to the main
non-domestic rating account kept for the year, and

(b) the aggregate of the items of account debited to the main
non-domestic rating account kept for the year.

(2) If the aggregate mentioned in sub-paragraph (1)(a) exceeds that
10mentioned in sub-paragraph (1)(b), an amount equal to the excess
must be—

(a) debited (as an item of account) to the main non-domestic
rating account kept for the year, and

(b) credited (as an item of account) to the main non-domestic
15rating account kept for the next year.

(3) If the aggregate mentioned in sub-paragraph (1)(b) exceeds that
mentioned in sub-paragraph (1)(a), an amount equal to the excess
must be—

(a) credited (as an item of account) to the main non-domestic
20rating account kept for the year, and

(b) debited (as an item of account) to the main non-domestic
rating account kept for the next year.

Part 2 Determination of the central and local share

25Determination of the central and local share

4 The Secretary of State must, for each year and in relation to each
billing authority in England, determine—

(a) the percentage (“the central share”) that is to be the billing
authority’s central share for the year for the purposes of
30Part 3 (payments to the Secretary of State in respect of the
central share), and

(b) the percentage (“the local share”) that is to be the billing
authority’s local share for the year for the purposes of Part
4 (payments by billing authorities to major precepting
35authorities).

Local government finance reports

5 (1) A determination under paragraph 4 must be specified in a report,
to be called a “local government finance report”.

(2) The Secretary of State must lay, or make arrangements for laying,
40the local government finance report before the House of
Commons.

(3) As soon as is reasonably practicable after a local government
finance report is laid before the House of Commons, the Secretary
of State must send a copy of the report to each relevant authority.

Part 3 5Payments to the Secretary of State in respect of the central share

Payments to the Secretary of State in respect of the central share

6 (1) This paragraph applies if a local government finance report for a
year is approved by resolution of the House of Commons.

(2) Each billing authority in England must make a payment for the
10year to the Secretary of State of an amount equal to the central
share of the billing authority’s non-domestic rating income for the
year.

(3) For the purposes of this paragraph, an authority’s “non-domestic
rating income” has the meaning given by regulations made by the
15Secretary of State.

(4) The regulations may, in particular, define that term by reference to
the total which, if the authority acted diligently, would be payable
to it in respect of the year under sections 43 and 45, subject to such
adjustments as may be specified in the regulations.

(5) 20The regulations may, in particular, make provision for
adjustments by reference to changes to the calculation of the
amount of a billing authority’s non-domestic rating income for an
earlier year but not taken into account in that calculation.

(6) This paragraph is subject to regulations under paragraph 8.

25Regulations about administrative arrangements

7 (1) The Secretary of State may by regulations make provision about
the administration of payments under paragraph 6.

(2) The regulations may, in particular, make provision—

(a) about the time and manner in which a payment under
30paragraph 6 or under regulations under this paragraph is
to be made (including for payment by instalments), and as
to the consequences of non-payment;

(b) about the making of a payment by a billing authority to the
Secretary of State or vice versa where—

(i) 35a payment under paragraph 6 is made in the course
of the year to which it relates, and

(ii) it is subsequently determined that the amount of
the payment required to be made under that
paragraph is more or less than that actually made;

(c) 40about the making of a payment by a billing authority to the
Secretary of State or vice versa where—

(i) a calculation of a payment under paragraph 6 is
made by reference to an estimate of an amount, and

(ii) it is subsequently determined that the actual
amount is more or less than the estimate.

Regulations about deductions from central share payments

8 (1) The Secretary of State may by regulations make provision for the
5deduction from a payment to be made under paragraph 6 by a
billing authority to the Secretary of State of an amount to be
determined in accordance with the regulations.

(2) The regulations may, in particular, make provision for the
determination of an amount to be deducted to be made by
10reference to the operation in relation to the billing authority of
section 47 (discretionary relief).

(3) The consent of the Treasury is required to regulations under this
paragraph.

Part 4 15Payments by billing authorities to major precepting authorities

Regulations about payments

9 (1) The Secretary of State may by regulations make provision
requiring billing authorities in England to make payments for a
year to major precepting authorities in England.

(2) 20The regulations must provide that a billing authority is not
required to make a payment for a year unless the local
government finance report for the year has been approved by
resolution of the House of Commons.

(3) The regulations may, in particular, make provision as to—

(a) 25the billing authorities that are required to make payments
under the regulations;

(b) the major precepting authorities that are entitled to receive
payments under the regulations;

(c) the amounts of the payments that are required to be made.

(4) 30The regulations may, in particular, make provision for the amount
of a payment to be made by a billing authority for a year to be such
proportion of its non-domestic rating income for the year as is
specified in or determined in accordance with the regulations.

(5) For the purposes of this paragraph, an authority’s “non-domestic
35rating income” has the meaning given by the regulations.

(6) The regulations may, in particular, define that term by reference to
the total which, if the authority acted diligently, would be payable
to it in respect of the year under sections 43 and 45, subject to such
adjustments as may be specified in the regulations.

(7) 40The regulations may, in particular, make provision for
adjustments by reference to changes to the calculation of the
amount of a billing authority’s non-domestic rating income for an
earlier year but not taken into account in that calculation.

(8) The regulations may not have the effect that the total amount
payable by a billing authority under the regulations for a year
exceeds the billing authority’s local share of its non-domestic
rating income for a year.

5Regulations about administrative arrangements

10 (1) The Secretary of State may by regulations make provision about
the administration of payments under regulations under
paragraph 9.

(2) The regulations may, in particular, make provision—

(a) 10about the making of calculations, and the supply of
information to a major precepting authority, by a billing
authority in connection with the determination of a
payment to be made under regulations under paragraph 9,
this paragraph or Part 6 (funds) so far as applying to non-
15domestic rates;

(b) about the assumptions and adjustments to be made, and
the information to be taken into account, in making such
calculations;

(c) about the consequences of non-compliance with provision
20under paragraph (a) or (b);

(d) about the time and manner in which a payment under
regulations under paragraph 9 or this paragraph is to be
made (including for payment by instalments), and as to the
consequences of non-payment;

(e) 25about the making of a payment by a billing authority to a
major precepting authority or vice versa where—

(i) a payment under regulations under paragraph 9 is
made in the course of the year to which it relates,
and

(ii) 30it is subsequently determined that the amount of
the payment required to be made under the
regulations is more or less than that actually made;

(f) about the making of a payment by a billing authority to a
major precepting authority or vice versa where—

(i) 35a calculation of a payment under regulations under
paragraph 9 is made by reference to an estimate of
an amount, and

(ii) it is subsequently determined that the actual
amount is more or less than the estimate;

(g) 40for the certification of calculations made, or information
supplied to a major precepting authority, by a billing
authority in connection with the determination of a
payment under regulations under paragraph 9, this
paragraph or Part 6 (funds) so far as applying to non-
45domestic rates;

(h) about the consequences where a certified calculation or
certified information does not match that made or
supplied by the billing authority, including (in particular)
about the use of the certified calculation or certified
50information.

(3) The regulations may confer power on the Secretary of State to give
directions about the certification of calculations or information.

Payments out of deduction from central share payments

11 (1) The Secretary of State may by regulations make provision for a
5billing authority to make a payment for a year to one or more
major precepting authorities of an amount equal to a proportion of
the amount that is to be deducted in accordance with regulations
under paragraph 8 from the billing authority’s payment under
paragraph 6 to the Secretary of State for the year.

(2) 10The regulations may make provision about the administration of
payments to major precepting authorities under the regulations.

(3) The regulations may, in particular, make provision in relation to
payments to major precepting authorities of the same kind as the
provision that may be made under sub-paragraph (2) of
15paragraph 10 in relation to payments to major precepting
authorities to which that sub-paragraph applies.

Part 5 Principal payments in connection with local retention of non-
domestic rates

20Determination of payments

12 (1) The local government finance report for a year must specify the
basis (“the basis of calculation”) on which the Secretary of State
intends to—

(a) calculate which relevant authorities are to make payments
25under this Part of this Schedule to the Secretary of State for
the year,

(b) calculate which relevant authorities are to receive
payments under this Part of this Schedule from the
Secretary of State for the year, and

(c) 30calculate the amount of each payment within paragraph
(a) or (b).

(2) Before making the local government finance report for a year, the
Secretary of State must notify such representatives of local
government as the Secretary of State thinks fit of the general
35nature of the basis of calculation.

Calculations following local government finance report

13 (1) This paragraph applies if a local government finance report for a
year is approved by resolution of the House of Commons.

(2) As soon as is reasonably practicable after the report has been
40approved, the Secretary of State must—

(a) calculate which relevant authorities are to make payments
under this Part of this Schedule to the Secretary of State for
the year,

(b) calculate which relevant authorities are to receive
payments under this Part of this Schedule from the
Secretary of State for the year, and

(c) calculate the amount of each payment within paragraph
5(a) or (b).

(3) Subject as follows, the Secretary of State may, at any time before
the end of the year following the year to which the report relates,
make one further set of calculations of the kind described in sub-
paragraph (2).

(4) 10The power to make a further set of calculations under sub-
paragraph (3) is not exercisable after the approval by the House of
Commons of any amending report made under paragraph 15 in
relation to the local government finance report.

(5) Calculations under this paragraph must be made in accordance
15with the basis of calculation specified in the report.

(6) As soon as is reasonably practicable after making calculations
under sub-paragraph (2) or (3), the Secretary of State must notify
each relevant authority of—

(a) whether any payments are to be made by the authority to
20the Secretary of State in accordance with the calculations,

(b) whether any payments are to be made to the authority by
the Secretary of State in accordance with the calculations,
and

(c) if any payments are to be made by or to the authority, the
25amount of each payment.

Payments following local government finance report

14 (1) Where calculations under paragraph 13(2) show that a relevant
authority is to make a payment to the Secretary of State, the
authority must make that payment to the Secretary of State.

(2) 30Where calculations under paragraph 13(2) show that the Secretary
of State is to make a payment to a relevant authority, the Secretary
of State must make that payment to the authority.

(3) The following provisions apply if calculations (“the revised
calculations”) are made under paragraph 13(3) for a year.

(4) 35In this paragraph “the original calculations” means the
calculations for the year under paragraph 13(2).

(5) Sub-paragraph (6) applies where—

(a) a payment the revised calculations show as falling to be
made by a relevant authority to the Secretary of State
40exceeds that shown as falling to be made by the original
calculations, or

(b) a payment the revised calculations show as falling to be
made by the Secretary of State to a relevant authority is less
than that shown as falling to be made by the original
45calculations.