1. Local Government Revenue Expenditure and Income
1.1 Total Revenue Expenditure and Income
The Police and Fire Reform (Scotland) Act 2012 made changes to the way police and fire services are delivered in Scotland. From 1 April 2013 police and fire services are delivered by new central government bodies - Police Scotland and the Scottish Fire and Rescue Service - and not local government. Due to the way these services were delivered and funded whilst part of local government it is not possible to remove all police and fire income and expenditure from prior years' statistics. As such 2013-14 values are not strictly comparable with previous years.
Total gross revenue expenditure by local government in Scotland in 2013-14 was £15.3 billion. Of this, £0.83 billion of expenditure was for the provision of housing through the Housing Revenue Account (HRA).
Net Revenue Expenditure to be met from government grant, local taxation and reserves was £11.7 billion.
Table 1.1 details revenue income and expenditure for 2013-14. The biggest single element of gross expenditure were operating costs (which includes property costs, supplies and services costs, transport and payments to agencies and other bodies) which account for £6.54 billion of all expenditure. The second largest element was employee costs which account for £6.16 billion.
Transfer payments are those made to individuals for which no goods or services are received in return by the local authority. The majority of transfer payments are housing benefits which make up £1.78 billion of the total of £2.05 billion. An adjustment for Inter Account and Inter Authority Transfers is made to the gross expenditure to take account of transfers between local authorities and between different services within an authority and ensure that expenditure is not counted twice.
The Housing Revenue Account (HRA) records income and expenditure relating to local authority housing stock. Whilst most other local authority services are funded through a combination of non-domestic rates and council tax income plus Government grants, the HRA is a ring-fenced account, and expenditure is funded by housing rents and Government subsidies.
Trading service accounts cover the finances of local authority operated services that are commercial in nature. They are financed by the charges made by a local authority to the recipients of the services they provide.
The main trading services are local authority transport (buses, ferries and other Local Authority transport undertakings), fishery harbours and markets and other trading services (including airports, other harbours and bridges).
|General Fund Services1||HRA Housing Services||Total|
|Premises Related Costs||928,627||360,029||1,288,656|
|Transport Related Expenditure||433,682||5,219||438,901|
|Supplies and Services||1,256,610||71,525||1,328,135|
|Third Party Payments||3,458,505||24,904||3,483,409|
|Revenue Contribution to Capital Expenditure||106,589||187,153||293,742|
|Adjustment for Inter Account and Inter Authority Transfers||-532,934||-26,704||-559,638|
|Specific Revenue Grants||8,584||3,673||12,257|
|General Capital Grant used to fund grants to third parties||125,312||0||125,312|
|Other Central Government Grants - Housing Services||1,612,393||0||1,612,393|
|Other Central Government Grants - Other||214,452||2,299||216,751|
|Other Grants reimbursements and Contributions||770,662||3,209||773,871|
|Customer and Client Receipts||1,243,867||1,073,362||2,317,229|
|Service Net Revenue Expenditure/Income(-)||10,509,588||-251,835||10,257,753|
|Net Revenue Expenditure (with Specific Grants Added Back In)||10,518,172||-248,162||10,270,010|
|Finance Costs (net of investment income)||589,303||135,615||724,918|
|Surplus(-)/deficit from Significant Trading Operations||-30,724||0||-30,724|
|Statutory repayment of debt||598,150||115,626||713,776|
|Net Revenue Expenditure to be financed from General Revenue Grant, Local Taxation and Reserves||11,674,901||3,079||11,677,980|
1. Includes trading services and non-HRA housing. For a breakdown of expenditure in these areas, refer to Table 1.2 and Annexes A and B.
2. Excluding General Revenue Funding
Source: Local Financial Returns – LFR 00
1.2 General Fund Revenue Expenditure and Income
The highest spending service in the General Fund is education which had net expenditure of £4.60 billion, which makes up 44% of net expenditure. Of this total £1.77 billion was spent on primary education and £1.87 billion on secondary education with the remainder spent on pre-primary, special and community education. Excluding Police & Fire, Education's share of total net expenditure has stayed the same at around 44% over the seven years to 2013-14.
Social work is the next largest service with net expenditure of £3.04 billion (29% of total net expenditure). Data on social work expenditure is collected on the basis of client groups. Of the client groups identified in the LFRs, older persons has the highest expenditure of £1.32 billion followed by children and families with £0.84 billion and adults with learning disabilities with £0.50 billion. A full breakdown of expenditure by sub-service is available in Annex A.
The single largest income source shown in Table 1.2 are the grants received by local authorities from the Department of Work and Pensions to fund housing benefits. These grants were worth £1.78 billion in 2013-14 and are shown as part of income in non-HRA housing.
Another significant source of income is customer and client receipts (including all charges to service users) which raised £1.24 billion across all services. Social work services also receive income from the NHS to provide services, the value of these payments in 2013-14 were £0.404 billion, up slightly from £0.398 billion in 2012-13. A full breakdown of income by service can be found in Annex B.
|Gross Expenditure||Income||Net Expenditure||Net Expenditure as
% of Total Services
|Ring Fenced Revenue Grants|
|Cultural and Related Services||707,638||87,265||620,373||5.9%||0|
|Roads and Transport||684,601||224,233||460,368||4.4%||0|
|Planning & Economic Development||462,752||178,392||284,360||2.7%||0|
|Net Cost of Service1||14,484,858||3,966,686||10,518,172||100.0%||8,584|
|Interest and Investment Income||673,808||84,505||589,303||0|
|Surplus/deficit from Significant Trading Operations||-30,724||0||-30,724||0|
|Statutory Repayment of Debt||598,150||0||598,150||0|
Source: Local Financial Returns – LFR 00
|Cultural & Related Services||662||638||618||614||620|
|Roads & Transport||486||503||477||487||460|
|Planning & Development Services||332||313||292||283||284|
|Central Services 2, 3||610||553||441||412||516|
|Total General Fund Expenditure excluding Police & Fire 3||10,617||10,593||10,228||10,319||10,518|
|Central Services (Police & Fire) 2, 3||22||7||-22||-50|
|Total General Fund Expenditure||12,096||11,892||11,510||11,588||10,518|
a. From 2010-11 the funding of Police Pensions changed leading to a reduction in net expenditure. Therefore police expenditure figures from 2010-11 onwards are not directly comparable with figures up to 2009-10.
2. Following the Police and Fire Reform (Scotland) Act 2012 figures for 2013-14 may not be comparable with previous years. See section 5.2 for details.
3. Police and fire board net expenditure in central services has been separated from overall general fund expenditure to allow for time series comparison.
Source: Local Financial Returns – LFR 00
Chart 1.1 shows net revenue expenditure per capita by local authority area. This includes expenditure by all local authority bodies in an area (i.e. including expenditure by councils, valuation boards and regional transport partnerships). The chart shows that on average in Scotland local government spent £2,191 per person in 2013-14, up slightly from £2,166 in 2012-13.
Source: Local Financial Returns - LFR 00 and NRS Mid-Year Population Estimates (2013)
1.3 Revenue Expenditure Financing
Revenue expenditure by local authorities is funded by three main sources:
- Grants from Central Government
- Local Taxation (Council Tax and Non Domestic Rates)
- Sales, fees and charges for services (Customer and Client Receipts)
The main source of revenue income for local government is General Revenue Funding, (formerly referred to as the Revenue Support Grant). General Revenue Funding (GRF) is paid by the Scottish Government in support of local authorities' general net revenue expenditure.
Local taxation contributed over £4.4 billion to the funding of local government in 2013-14 and further information on these taxes is set out in the following sections. Other income is mostly composed of grants and subsidies received from central government and other parts of the public sector.
|General Revenue Grant1||7,757||8,149||7,790||7,782||7,225|
|Council Tax Benefit Subsidy||368||375||376||371|
|Non Domestic Rates||2,165||2,068||2,182||2,263||2,435|
|Customer and Client Receipts||2,287||2,179||2,298||2,341||2,327|
|Total revenue income||17,886||18,052||17,879||17,950||16,481|
1. Figures for 2013-14 are not comparable as prior years include income relating to police and fire joint board expenditure. See section 5.2 for more details.
2. Council Tax Reduction (CTR) was introduced from 1 April 2013 to replace Council Tax Benefit (CTB), which has been abolished by the UK Government as part of its welfare reform programme.
Sources: General Revenue Funding (Up to 2010-11) - Finance Circulars; Non-Domestic Rates - Finance Circulars; All Other Data - Local Financial Returns (LFRs)
1.3.1 Council Tax
In 2013-14, council tax bills were issued to around 2.4 million dwellings in Scotland. The amounts collected in 2013-14 raised a total of almost £2 billion across all local authorities in Scotland.
Council tax was introduced in Scotland on the 1st April 1993 to replace the Community Charge system. It is a tax system based on dwellings and is used as a source of funding in addition to that received from other sources (such as General Revenue Funding, Central Government Grants, ring-fenced revenue grants and other locally raised income).
There are a number of factors that determine the amount of council tax that a dwelling is liable for. These are:
The market value of the dwelling as at the 1st April 1991. Each dwelling is placed into one of 8 bands from A to H, with band A dwellings liable for the lowest rates of council tax and band H attracting the highest rates.
The band D rate set by the local authority, with other bands being set by a ratio to band D.
A range of exemptions, discounts and reductions that are available in certain circumstances, or in some cases an increase in council tax due to the application of a levy.
Table 1.5 shows the number of dwellings that were chargeable for council tax and the number that were exempt each year from 2009 to 2014. There were a total of 2.540 million dwellings in Scotland in 2014, an increase of around 63,000 (2.5 per cent) since 2009. The number of chargeable dwellings has also increased by around 62,500 (2.6 per cent) from 2.365 million chargeable dwellings in 2009, to 2.427 million in 2014. Around 4.5 per cent of dwellings are exempt from council tax each year, 112,525 in 2014.
Source: Council Tax Base (CTAXBASE) returns
Table 1.6 shows the number of chargeable dwellings in each local authority and council tax band. The three local authorities with the highest number of chargeable dwellings were Glasgow, Edinburgh and Fife and over a quarter of the chargeable dwellings in Scotland are in one of these local authorities. Around three quarters (1.8 million) of all chargeable dwellings were in council tax bands A to D, and 0.5 per cent (12,579 dwellings) in band H.
|Band A||Band B||Band C||Band D||Band E||Band F||Band G||Band H||Total|
|Valuation band ranges|| Under
|Ratio to band D||6/9||7/9||8/9||9/9||11/9||13/9||15/9||18/9|
|Argyll & Bute||7,204||9,529||8,736||5,766||7,094||4,014||2,741||217||45,301|
|Dumfries & Galloway||10,613||22,076||11,535||9,724||10,209||4,997||2,360||155||71,669|
|Edinburgh, City of||19,988||43,203||40,496||34,623||36,288||22,738||20,096||3,713||221,145|
|Perth & Kinross||8,415||14,123||11,206||10,082||11,123||7,028||5,636||645||68,258|
|% of all dwellings||21%||23%||16%||13%||13%||8%||5%||1%||100%|
1. Excludes dwellings exempt from council tax
2. Council Tax Reduction recipients are included in this Table.
Source: Council Tax Base 2014 (CTAXBASE)
Chart 1.3 shows the distribution of chargeable dwellings across council tax bands in each local authority. Across the whole of Scotland, 60.6 per cent of all chargeable dwellings are in bands A to C. The distribution varies across local authorities because of variations in property market values. Eilean Siar has the largest proportion of its dwellings in bands A to C (77.9 per cent), whereas East Renfrewshire has the lowest proportion of its properties in bands A to C (27.3 per cent).
As well as the valuation band of the dwelling, the rates for each local authority also determine the council tax liability for each dwelling. Scottish Government and local Government have worked in partnership to freeze council tax rates each year since 2007-08. Prior to this, each local authority determined its own rates of council tax as part of their budget setting process. As a result, each local authority area has different council tax rates. The range of band D council tax levels for each local authority are shown in Chart 1.4. The rates range from £1,024 in Eilean Siar to £1,230 in Aberdeen City.
The council tax charged for all other bands is a proportion of the band D level set. For example, the band A council tax rate is 6/9 (or 67 per cent) of the band D rate for each local authority (the ratios for all bands can be seen in the top row of Table 1.6).
Source: Council Tax Assumptions (CTAS) returns
Table 1.7 shows how the average band D council tax rates for Scotland have changed each year from 2010-11 to 2014-15. Since 2008-09, the council tax freeze has resulted in each local authority maintaining their rates at 2007-08 levels. The one exception is Stirling where the council took the decision to reduce the band D council tax from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13. This has caused the Scotland Average band D council tax rate to remain steady at £1,149 since 2007-08 - a fall in real terms.
The average band D council tax bill per dwelling is £989 in 2014-15. This average takes in to account the distribution of dwellings across council tax bands. The average bill per dwelling is lower than the average band D rate because there are a greater proportion of dwellings in the lower value council tax bands than the higher valued bands, as can be seen in Table 1.6.
The impact of Scotland's CTR scheme, which was introduced in 2013 following the UK Government's abolition of the Council Tax benefit, on the average council tax bill per dwelling can also be seen in Table 1.7. Figures on the total value of reductions through CTR for 2014-15 will be available in the 2014-15 version of this publication. The CTR scheme reduces the council tax liability of vulnerable people in Scotland, including people on low incomes, pensioners and lone parents. After taking these reductions in liability into account, the average bill per dwelling for 2013-14 reduced by £150 from £988 to £838.
|Scotland Average band D council tax rate(£)1||1,149||1,149||1,149||1,149||1,149|
|Band D % increase (cash terms)||0.0%||0.0%||0.0%||0.0%||0.0%|
|Band D % increase (real terms)2||-2.7%||-1.8%||-1.6%||-2.1%||-2.1%|
|Average council tax bill per dwelling (£)3||985||984||985||988||989|
|Average council tax bill per dwelling, after Council Tax Reduction/Benefit4||827||826||830||838||n/a|
1. Since 2008-09, council tax rates have been frozen at 2007-08 levels.
2. Real terms figures are calculated using GDP deflators (HM Treasury, Dec 2014)
3. This average is taken over all chargeable dwellings and is affected to a minor extent by a number of factors such as the distribution of dwellings across council tax bands, discounts and exemptions, new construction and removal of demolished housing from the roll.
4. Council Tax Benefit for all years up to 2012-13, Council Tax Reduction from 2013-14 onwards.
Source: Council Tax Assumptions (CTAS), Council Tax Base (CTAXBASE), Local Financial Returns - LFR 12
Not all dwellings are liable to pay the full rate of council tax. Discounts and exemptions are available for certain types of dwellings, and the CTR scheme is available to support vulnerable people in meeting their council tax liabilities. Long term empty properties in some local authorities may be liable for an increased amount of council tax. Table 1.8 below summarises the range of discounts, exemptions and reductions available and the rate of decrease in liability that applies to each type. Numbers of dwellings that are in receipt of each of these schemes from 2009 to 2014 are shown in Table 1.9. Note that in some cases, a council tax liability may be affected by more than one type of discount, exemption or reduction; e.g. an individual may live on their own and be on a low income, therefore in receipt of the 25 per cent discount and a CTR.
|Support||Typical dwellings that are eligible||Decrease in liability|
|Occupied||Persons who are exempt from council tax e.g. full time students.||100%|
|Unoccupied||Empty for less than 6 months, cannot be occupied because in need of repair, residents have moved out due to care needs.||100%|
|Reduction in liability|
|Disability reduction||Homes that have been adapted for a disabled person||One council tax band (e.g. liable for band C when property is band D)|
|25% discount||Occupied by only one council tax liable adult.||25%|
|Second Homes||Occupied by those living in tied accommodation (e.g. farm workers, members of the clergy), when they are contributing to the local economy.||Between 10 and 50%, depending on local authority policy (see Table 1.10)|
|Long Term Empty - 6 to 12 months||Empty and unfurnished for more than 6 months||50%|
|Long Term Empty - more than 12 months||Empty and unfurnished for more than 12 months||Discount between 10% and 50%, or an increase, depending on local authority (see Table 1.10).|
|Occupied entirely by disregarded adults||Dwellings with one or more residents where each of them falls to be disregarded for the purposes of discount.||50%|
|Council Tax Reduction|
|Passported||In receipt of Pension Credit (Guarantee), JSA (Income based), ESA (Income Based), Income Support.||100%|
|Not passported||Low income household||Up to 100%, depending on means test|
1. The examples given here are typical but not exhaustive. For a full explanation of council tax discounts and exemptions, download the Scottish Government leaflet here: http://www.scotland.gov.uk/Resource/0042/00423608.pdf
2. Some council tax bill amounts may be affected by more than one type of discount or reduction.
Table 1.9 shows the number of dwellings eligible for each type of discount, exemption or reduction. Of the 2.4 million chargeable dwellings in Scotland, around 1 million were eligible for a discount in 2014. The most common type of discount was the 25 per cent discount, which is available for dwellings where only one person is liable to pay council tax. More than one in three chargeable dwellings are entitled to the 25 per cent discount. Almost 60,000 dwellings are classified as second homes or long term empty properties. Local authorities have discretionary powers to vary the discount, remove the discount, or increase council tax in 2013-14 on long term empty properties (this does not apply to second homes) - an analysis of these figures by local authority is given below. Around 2,800 dwellings received a 50 per cent discount because they were occupied entirely by disregarded adults. The CTR scheme which was introduced in April 2013, supports over half a million, or around a fifth of chargeable dwellings, in meeting their council tax liability.
|Type of support||2009||2010||2011||2012||2013||2014|
|All chargeable dwellings||2,365,229||2,377,474||2,389,029||2,401,869||2,410,331||2,427,805|
|Long Term Empty (empty over 6 months)||22,169||24,598||25,356||25,454||27,327||31,884|
|Occupied entirely by disregarded adults||2,668||1,887||1,910||1,809||1,579||2,802|
|Dwellings not subject to discount||1,366,375||1,371,072||1,376,998||1,385,799||1,393,440||1,411,628|
|Council Tax Reduction/Benefit3||549,220||563,720||565,730||560,880||548,070||533,980|
1. All figures as at September of each year
2. Long term empty properties have been empty for 6 months or more. It is not possible for some councils to separately identify second homes and long term empty dwellings. For these councils, the total number of second homes and long term empty dwellings have been recorded under second homes.
3. Council Tax Benefit figures from 2009 to 2012 were published by Department for Work & Pensions and are available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229795/hbctb_release_may13_revised.xls
4. Some dwellings can be eligible for more than one type of support. E.g. if a dwelling's council tax liability is affected by the 25 per cent discount and CTR, it will be counted twice in the table above.
Source: Council Tax Base (CTAXBASE) Returns, Council Tax Reduction data extract, Single Housing Benefit Extract (SHBE).
In 2013-14 local authorities gained the discretionary power to remove the empty properties discount or set a council tax increase of 100 per cent on properties which have been empty for one year or more. Table 1.10 summarises the policies on second homes and long term empty properties that were introduced by each local authority for billing years 2013-14 and 2014-15. In 2013-14, 28 of the 32 local authorities chose to retain the council tax discount at 10 per cent. Glasgow City and North Lanarkshire reduced the discount for long-term empty properties by 50 per cent. Highland removed the discount and Eilean Siar imposed an increase of 100 per cent on long-term empty properties. In 2014-15, the number of local authorities implementing a 10 per cent discount on all long term empty properties decreased to 18. Argyll & Bute, North Lanarkshire, and Stirling opted for a 100 per cent increase (i.e. double the council tax liability) for long term empty properties. Aberdeen City, Aberdeenshire, East Lothian, Edinburgh, Eilean Siar, Fife, Perth & Kinross and West Dunbartonshire introduced a range of policies depending on the circumstances of the household. East Renfrewshire chose a 50 per cent discount, Moray chose a 50 per cent increase. Highland again chose to remove the discount on long term empty properties.
|Local authority||Second Homes||Long-Term Empty properties|
|Aberdeen City||10%||10%||10%||10% to -100%|
|Aberdeenshire||10%||10%||10%||10% to -100%|
|Argyll & Bute||10%||10%||10%||-100%|
|Dumfries & Galloway||10%||10%||10%||10%|
|East Lothian||10%||10%||10%||0% to -100%|
|Edinburgh, City of||10%||10%||10%||50% to -100%|
|Eilean Siar||10%||10%||-100%||50% to -100%|
|Fife||10%||10%||10%||50% to -100%|
|Perth & Kinross||10%||10%||10%||10% to -100%|
|West Dunbartonshire||10%||10%||10%||10% to -100%|
Source: Council Tax Assumptions.
1. Increased council tax levels are shown as negative (e.g. -100% indicates a 100% increase, or a double in the rate).
2. Removal of discount is shown as 0%.
3. Some local authorities' policies were subject to review at the time of giving the information.
4. Some local authorities chose to implement a range of discounts and increases depending on the circumstances of the property. For brevity, the range has been, e.g. 10% to -100% where certain properties receive a maximum of 10% discount, ranging to a 100% levy.
Table 1.11 shows the number of long term empty properties (i.e. empty for more than 6 months), the number that have been empty for over 12 months and the number of those that are subject to a reduced discount or an increase in council tax as at September 2014. These figures relate to the policies for billing year 2014-15, as shown in Table 1.10. In September 2014, of the 16,527 dwellings that had been empty for over 12 months, 5,747 dwellings were affected by a discount below 10 per cent or an increase in council tax. This provision does not apply to second homes. Over 43,137 dwellings were classified as exempt due to being unoccupied.
|Number of dwelling entitled to a discount due to being second homes 1||Long term empty properties||Unoccupied exemptions 2|
|Number of dwellings entitled to a discount or increase due to being long term empty||Of which, empty for over 12 months||Of which a discount below 10% or an increase has been applied|
|Argyll & Bute||3,379||1,358||778||620||1,002|
|Dumfries & Galloway||1,868||1,166||886||0||1,413|
|Edinburgh, City of||2,317||1,770||751||751||2,264|
|Perth & Kinross||1,224||1,631||1,293||338||1,185|
1. Long term empty properties are properties liable for council tax, which have generally been empty for 6 months or more.
2. Unoccupied exemptions are properties which are empty and exempt from paying council tax.
3. More details on council tax discounts and exemptions can be found on the Scottish Government Website at: http://www.scotland.gov.uk/Topics/Government/local-government/17999/counciltax
Local authorities are responsible for billing and collecting the correct amounts of council tax. Each individual bill is calculated by applying the multiplier for each band to the band D council tax level, then applying any discounts, exemptions or reductions as detailed above. Immediately before the start of each financial year local authorities issue council tax bills to dwellings. They collect council tax income relating to these bills over the year, and also continue to collect late amounts from previous billing years. The amounts of council tax collected by each local authority in 2013-14 are reported in Table 1.12 below. In 2013-14 for Scotland as a whole, the total amount of council tax collected (after CTR) was £1.98 billion.
The provisional in-year Council Tax collection rate for 2013-14 was 95.2 per cent. More information about bills issued in 2013-14 and the provisional amounts collected are available in the statistics publication Council Tax Collection Statistics, 2013-14.1
|Net Council tax income|
|Argyll & Bute||42,066|
|Dumfries & Galloway||54,824|
|Edinburgh, City of||208,086|
|Perth & Kinross||67,083|
1. Figures are after Council Tax Reduction is taken in to account and include Community Charge and additional amount billed for reduced discount for second homes and long term empty properties.
2. Figures relate to income collected in financial year 2013-14, which can include amounts that were billed in previous years.
Source: Council Tax Receipts & Returns, 2013-14. Local Financial Returns, 2013-14.
CTR is funded jointly by the UK Government, Scottish Government, and local government. In 2013-14, CTR funding from Government totalled £351 million (£328 from UK Government and £23 million from Scottish Government). Local authorities agreed to contribute an additional £17 million from their own budgets to the cost of the scheme, as part of the joint commitment between Scottish Government and local government to mitigate the UK Government's 10% cut in funding, which was estimated at £40m for 2013-14. The amounts distributed to each local authority and the final total value of reductions awarded are shown in Table 1.13. The total value of reductions through the CTR scheme across Scotland was £359.7 million. This figure is £8.7 million more than the £351 million funding provided by UK Government and Scottish Government, and £8.3 million less than the £368 million total budget which included the £17 million from local authorities.
|Government (SG and UKG)||Final total reduction in liability|
|Argyll & Bute||5,577||5,781|
|Dumfries & Galloway||8,792||8,935|
|Edinburgh, City of||27,131||27,687|
|Perth & Kinross||6,712||6,867|
1.3.2 Non-Domestic Rates
Non-Domestic Rates (NDR) is a property tax paid by the owner/occupier or tenant of a non-domestic property.
In 2013-14, the NDR income collected was £2.37 billion.
The principles of non-domestic rates were established in the Lands Valuation (Scotland) Act of 1854. This act also provided for the appointment of the Scottish Assessors, who are responsible for determining the classification and valuation of non-domestic and domestic properties, and are independent of both the Scottish Government and local authorities. A non-domestic property is an individual property used for non-domestic purposes. Examples include businesses, public buildings and advertising hoardings. The value given to a property for NDR purposes is called its rateable value (RV).
The RV of a property is a legally defined valuation provided by the Assessor, broadly based on the rental values the property could achieve. As such it is not a reflection of the profitability, turnover or output of the business. It is established at revaluation where the Scottish Assessors assess rateable values for all non-domestic properties in Scotland, taking account of the type and nature of the property. All non-domestic properties and their corresponding RVs are listed on the Valuation Roll, which is maintained by the Scottish Assessors.
NDR bills are calculated using the rateable value (RV) of non-domestic properties, multiplied by a poundage set nationally by Scottish Ministers, less any relief or exemption entitlement.
For properties with a rateable value greater than £35,000, the Large Business Supplement (LBS) applies in addition to the poundage (the poundage is effectively increased slightly by adding the LBS).
Table 1.14 shows the composition of properties (and associated RV) on the Valuation Roll by property type. As at 1st April 2014, there were 221,292 properties with a total RV of £6.7 billion. Shops were the most prevalent type of property on the valuation roll, making up nearly a quarter (24%) of the number of properties and RV on the roll. Industrial subjects and offices are the next two largest categories in terms of numbers and RV. Together, these three categories account for 63% of properties on the valuation roll, and 58% of the RV.
|Number of properties||Rateable value (£000s)||% of properties on the Valuation Roll||% of Rateable Value on the Valuation Roll|
|CATEGORY||1st April 2014||1st April 2014||1st April 2014||1st April 2014|
|Education and Training||3,774||507,276||1.7%||7.6%|
|Garages and Petrol Stations||4,360||64,569||2.0%||1.0%|
|Health and Medical||3,172||204,015||1.4%||3.1%|
|Leisure, Entertainment, Caravans etc.||20,996||236,243||9.5%||3.5%|
|Public Service Subjects||9,921||317,384||4.5%||4.8%|
|Quarries, Mines, etc.||688||23,613||0.3%||0.4%|
|TOTAL ALL NON-DOMESTIC PROPERTIES||221,292||6,680,715||100%||100%|
Source: Scottish Assessors Valuation Roll, 1st April 2014
Table 1.15 provides a breakdown of properties on the Valuation Roll by local authority and RV band. In terms of the Small Business Bonus Scheme and the application of the Large Business Supplement, £18,000 and £35,000 represent the rateable value thresholds for small and large businesses respectively. Around 78% of all properties (172,540 properties) have a Rateable Value less than or equal to £18,000.
|Local Authority||Rateable Value Band||Total Non-Domestic Properties|
|<= £18,000||£18,001 to £35,000||> £35,000|
|Argyll & Bute||7,554||349||342||8,245|
|Dumfries & Galloway||8,145||482||541||9,168|
|Edinburgh, City of||13,398||2,407||3,907||19,712|
|Perth & Kinross||7,051||589||714||8,354|
1. Includes a small percentage of properties with zero rateable value.
Source: Scottish Assessors Valuation Roll, 1st April 2014
Table 1.16 shows a time series of annual NDR Income, total Rateable Value, Poundage Rate and Large Business Supplement. Revaluations typically take place on a 5-year cycle and are intended to be 'revenue neutral'. As a consequence of the 2010 revaluation, the poundage was reduced from 48.1p in 2009-10 to 40.7p in 2010-11 and the total RV of non-domestic properties (the tax base) increased from £5.3 billion in 2009-10 to £6.6 billion in 2010-11. The next revaluation will take place in 2017.
|Non Domestic Rates Income (£m)||2,010||2,138||2,251||2,347||2,367|
|Total Rateable Value3 (£m)||5,299||6,612||6,678||6,718||6,716|
|Poundage Rate (pence)||48.1||40.7||42.6||45.0||46.2|
|Large Business Supplement4 (pence)||0.4||0.7||0.7||0.8||0.9|
1. Revaluation took place in 2010
2. All income figures, including 2013-14, are the final audited income collected by councils.
3. Total rateable value is given at the start (1 April) of the relevant financial year
4. The Large Business Supplement is applied in addition to the poundage for properties with a rateable value over £35,000
Source: NDR Income - Non-domestic Rate Income Returns, Rateable Value - Scottish Assessors Valuation Roll as at 1st April
Table 1.16 also shows that the total RV has increased slightly since the 2010 revaluation from £6.61 billion at 1st April 2010 to £6.72 billion at 1st April 2013. This is due to the net impact of several factors including increases in the tax base from new properties or extension of existing properties and decreases as demolished properties are deleted from the valuation roll or as the RV is reduced as a result of appeals. As Non-Domestic Rates bills in Scotland are directly related to the rateable values of individual non-domestic properties, changes in the total RV impact on the amount of NDR available for collection, along with other factors such as the poundage rate and backdated revaluation appeals losses which also affect the final income.
Inflation is a key driver of growth in NDR income as the poundage rate, set nationally by Scottish Ministers, is typically tied to the Retail Price Index (other than in the first year of a revaluation). NDR bills are calculated by multiplying the RV of a property by the poundage rate, and then applying discounts and exemptions. Large business properties (those with a RV greater than £35,000) also pay a supplement to the poundage rate, known as the Large Business Supplement (LBS), which is used to fund a portion of the Small Business Bonus Scheme (SBBS). The LBS was 0.9p in 2013-14. For the period 2012-13 to 2014-15, large retailers that sell both alcohol and tobacco also pay the Public Health Supplement (PHS) - an additional 13p on the poundage rate in 2013-14. These supplements increase the amount paid in NDR bills. Conversely, exempt properties (which do not pay rates), and relief schemes such as the Small Business Bonus Scheme can significantly reduce the amount paid in NDR bills, and therefore the NDR income.
Table 1.17 summarises the total number of properties and rateable value as at 1st April 2014 and the NDR income collected in 2013-14 by local authority (net of reliefs).
April 2014 (£000s)
| Non-Domestic Rate
income 2013-143 (£000s)
|Argyll & Bute||8,245||89,218||28,544|
|Dumfries & Galloway||9,168||118,755||41,532|
|Edinburgh, City of||19,712||907,064||325,990|
|Perth & Kinross||8,354||148,090||47,274|
1. Rates bills for specific utilities are collected by specified councils on behalf of all 32 councils, and appear on the valuation roll for those councils: South Lanarkshire (Electricity), West Dunbartonshire (Gas), Fife (Water), Falkirk (Docks and Harbours), Highland (Railways), and Renfrewshire (Telecommunications). This increases the take for those authorities.
2. Includes properties with a zero rateable value
3. Final Audited income collected by councils.
4. Totals may not sum exactly due to rounding.
Source: Number of Properties and Rateable Value - Scottish Assessors Valuation Roll 1st April 2014;
NDR Income - Non-domestic Rate Income Returns provided by Councils
Table 1.17 shows geographical variations in the number of properties, rateable value and NDR income. It should be noted however that some councils have responsibility for collection of NDR for specific utilities as detailed in the footnote to the table. For these councils, the entries on the valuation roll and NDR income include Scotland-wide data for the specified utilities sectors. To avoid the need for revisions, only final (audited) NDR income figures are included in this publication. The deadline for NDR income returns was brought forward to allow audited 2013-14 NDR income data to be included.
|Unoccupied Property/Partly Unoccupied Property||153,361||145,936||157,862||169,134||146,496|
|Disabled persons relief||45,484||51,901||54,372||57,580||58,299|
|Rural Rate Relief||3,918||4,129||4,218||4,305||4,323|
|Renewable Energy Relief Scheme3||3,560||4,126||4,811||7,333|
1. Estimates include mandatory and discretionary elements of relief where applicable, but exclude backdated payments of relief
2. Reliefs for all years, including 2013-14, are final audited figures.
3. The Renewable Energy Relief Scheme was introduced at 1 April 2010.
4. The new start relief scheme was introduced at 1 April 2013 and will run for 3 years.
5. The fresh start relief scheme was introduced at 1 April 2013.
6. Other includes Hardship and Enterprise Areas.
7. Totals may not sum exactly due to rounding.
Source: Non-domestic Rate Income Returns
There are a number of types of NDR relief that reduce the NDR bill for qualifying properties. Table 1.18 shows the main types of relief available and the amount of relief provided each year from 2009-10 to 2013-14.
The gross amount of relief provided has increased substantially from £465 million in 2009-10 to £590 million in 2013-14. Key reasons for this are increases in the poundage rate (due to normal annual inflation) and an increase in relief provided through the Small Business Bonus Scheme, with expansion of the scheme thresholds and greater awareness of the scheme likely to be contributory reasons. Other reasons for change are likely to include growth in the tax base over this period (i.e. an increase in the overall Rateable Value) and changes to amounts awarded for other reliefs (for example an increase in Charity Relief and the introduction of the new relief schemes).
The total NDR income collected by Local Authorities is pooled at the Scotland level. Each council reports the NDR collected to the Scottish Government to be included in the central pool. The amount to be re-distributed to each authority from the pool is known as the Distributable Amount (DA) and is set by the Scottish Government before the start of the financial year in question.
From 1st April 2011, the distribution methodology provides that Councils retain what it is estimated they can collect in business rates (rather than the previous policy where it was redistributed on the basis of population shares). As the combined total of NDR income and General Revenue Funding (GRF) provided to councils is guaranteed by the Scottish Government, any reduction in the amount of NDR collected is compensated for by a corresponding increase in GRF and vice versa. Any surpluses or deficits are paid out or recovered from Councils in the calculation of future years distributable business rates totals. The DA is based upon a forecast of the NDR income and prior year adjustments, and is therefore not guaranteed to match the total contributions to the pool for that year.
|Non-Domestic Rate Income (£000s)|
|Argyll & Bute||28,492|
|Dumfries & Galloway||44,549|
|Edinburgh, City of||334,630|
|Perth & Kinross||50,928|
Source: Local Government Finance (Scotland) Order 2013
1.3.3 Customer and Client Receipts
Local Authorities receive income from sales, rents, fees and charges as a result of providing services. These services are wide ranging in nature, as is the amount of income associated with each service, as detailed in Table 1.20 below.
|Cultural & Related Services||85,516||81,521||77,479||70,728||71,185|
|Roads & Transport||165,941||146,068||171,674||154,117||175,218|
|Planning & Development Services||120,146||97,897||118,518||116,541||121,077|
|Total GF Customer and Client Receipts excluding Police & Fire||1,228,857||1,137,112||1,254,719||1,183,506||1,243,864|
|Police, Fire & Emergency Planning||93,043||55,098||66,575||111,992|
|Total GF Customer and Client Receipts||1,321,900||1,192,210||1,321,294||1,295,498||1,243,864|
|Common Good Fund||9,073||7,168||10,809||11,113||9,867|
|Total Customer and Client Receipts||2,286,816||2,179,038||2,298,105||2,340,997||2,327,259|
1. The Housing Revenue Account (HRA) records income and expenditure relating to Local Authority housing stock
b. Following the Police and Fire Reform (Scotland) Act 2012 figures from 2013-14 may not be comparable with previous years.
See section 5.2 for details.
Source: Local Financial Returns (LFRs)
Email: Euan Smith
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