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The Local Authorities (Capital Finance and Accounting) (England) Regulations 2003

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Changes to legislation:

The Local Authorities (Capital Finance and Accounting) (England) Regulations 2003, PART 4 is up to date with all changes known to be in force on or before 01 February 2025. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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PART 4E+WCAPITAL RECEIPTS

SUMS TO BE TREATED AS CAPITAL RECEIPTSE+W

Repayment of loan etc. to a local authorityE+W

7.—(1) For the purposes of Chapter 1 of Part 1 (capital finance etc), the sums referred to in paragraph (2), paid on or after 1st April 2004, shall be treated as capital receipts.

(2) Subject to [F1paragraphs (3) and (4)], the sums referred to for the purposes of paragraph (1) are sums paid to a local authority as repayment of any loan, grant or other financial assistance given by the local authority for such a purpose that, if the giving of that financial assistance had been expenditure incurred at the time of the repayment, it would have constituted capital expenditure(1).

(3) Where the financial assistance referred to in paragraph (2) is a loan given by a parish council or charter trustees, any sums paid to the local authority as repayment of that loan shall not be treated as capital receipts.

[F2(4) A sum paid to a local authority to redeem a bond on its maturity or for the purchase of a bond does not constitute repayment of a loan or other financial assistance.]

Textual Amendments

Commencement Information

I1Reg. 7 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

[F3BondsE+W

7A.—(1) Subject to paragraph (2), for the purposes of Chapter 1 of Part 1, a sum received by a local authority in respect of—

(a)the redemption on maturity of a bond, or

(b)the disposal of a bond,

must be treated as a capital receipt.

(2) Paragraph (1) applies only if—

(a)the acquisition of the bond was prior to 1st April 2012, and

(b)expenditure on the acquisition was treated as capital expenditure.]

Textual Amendments

Disposal of mortgage portfolioE+W

8.  For the purposes of Chapter 1 of Part 1, a sum received by a local authority on or after 1st April 2004 in respect of the disposal of the authority’s rights and obligations as mortgagee of any housing land which, apart from this regulation, would not be a capital receipt, shall be treated as a capital receipt.

Commencement Information

I2Reg. 8 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

Payment made to redeem landlord’s shareE+W

9.  For the purposes of Chapter 1 of Part 1, where an interim or final payment is made to a local authority, on or after 1st April 2004, in accordance with Schedule 6A to the Housing Act 1985 (redemption of landlord’s share)(2), the sum received by the authority shall be treated as a capital receipt if, apart from this regulation, it would not be a capital receipt.

Commencement Information

I3Reg. 9 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

Social HomeBuy receiptsE+W

F49A.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F5Securitisation transaction receiptsE+W

9B.  For the purposes of Chapter 1 of Part 1, any sum received as consideration by a local authority as the result of a securitisation transaction which, apart from this regulation, would not be a capital receipt, must be treated as a capital receipt.]

Textual Amendments

SUMS NOT TO BE TREATED AS CAPITAL RECEIPTSE+W

Capital receipts not exceeding £10,000E+W

10.—(1) F6... A sum received by a local authority which, apart from this regulation, would be a capital receipt by virtue of section 9(1) shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt if the aggregate of all sums received or to be received by the authority in respect of the disposal of an interest in a capital asset, for which the sum is paid, does not exceed £10,000.

(2) A sum received by a local authority which, apart from this regulation, would be treated as a capital receipt by virtue of regulation 7, shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt if the aggregate of all sums received or to be received by the authority as repayment of a loan, grant or other financial assistance, for which the sum is paid, does not exceed £10,000.

(3) A sum received by a local authority which, apart from this regulation, would be treated as a capital receipt by virtue of regulation 8, shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt if the aggregate of all sums received or to be received by the authority in respect of the disposal of the authority’s rights and obligations, for which the sum is paid, does not exceed £10,000.

(4) A sum received by a local authority which, apart from this regulation, would be treated as a capital receipt by virtue of regulation 9, shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt if the aggregate of all sums received or to be received by the authority in respect of redemption of the landlord’s share, for which the sum is paid, does not exceed £10,000.

(5) F7... A notional capital receipt(3) which, apart from this regulation, would be treated as a capital receipt received by a local authority by virtue of regulation 22(5), shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt if the aggregate of all sums received or to be received by the authority in respect of the disposal of the interest in housing land, for which the notional capital receipt is determined, does not exceed £10,000.

(6) In paragraphs (1) and (5), “all sums received or to be received by the authority” include the amount of all notional capital receipts determined in respect of the disposal.

F8(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Commencement Information

I4Reg. 10 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

Operating and finance leasesE+W

11.  A sum received by a local authority—

(a)under any arrangement which is treated, in accordance with proper practices, as an operating lease or a finance lease;

(b)which, apart from this regulation, would be a capital receipt; and

(c)which, in accordance with proper practices, is to be credited to a revenue account,

shall not be treated for the purposes of Chapter 1 of Part 1 as a capital receipt.

Commencement Information

I5Reg. 11 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

POOLING OF RECEIPTSE+W

[F9Pooling of receipts from housing landE+W

12.—(1) The local authority must use capital receipts to pay the poolable amount in respect of each quarter to the Secretary of State on or before the following dates (“the due date”)—

(a)(i)30th April;

(ii)31st July;

(iii)31st October; or

(iv)31st January,

whichever of those days is the earliest day following the last day of the quarter; or

(b)if later, such date as is notified to the local authority by the Secretary of State.

(2) Where the poolable amount paid to the Secretary of State has been incorrectly calculated by the local authority, the local authority must—

(a)pay any outstanding amount to the Secretary of State (including any interest payable under regulation 13); or

(b)offset any amount paid in excess of the poolable amount against any further poolable amount payable to the Secretary of State under this regulation.]

Textual Amendments

[F9Interest on late paymentsE+W

13.—(1) The local authority must use capital receipts, which it derived from the disposal of housing land, to pay interest to the Secretary of State in accordance with the following provisions of this regulation.

(2) Where the local authority does not pay part or all of the poolable amount to the Secretary of State by the due date, the local authority shall pay interest to the Secretary of State on the unpaid part amount of the poolable amount.

(3) The interest shall be calculated on any unpaid amount at a rate of 1% above base rate on a day to day basis compounded with three-monthly rests.

(4) Where interest is payable by virtue of paragraph (2), the interest on the unpaid amount shall be calculated for the period starting on the day after the due date and ending on the date of the payment of the unpaid amount.

(5) The local authority must pay to the Secretary of State any interest, payable in respect of any unpaid amount, on the date on which it pays the unpaid amount.

(6) In this regulation—

“base rate” means the base rate for the time being quoted by the reference banks or, where there is for the time being more than one such rate, the rate which, when the base rate quoted by each bank is ranked in descending sequence of seven, is fourth in the sequence; and

“reference banks” means the seven largest persons for the time being who—

(i)

have permission under Part IV of the Financial Services and Markets Act 2000 (permission to carry on regulated activities) to accept deposits;

(ii)

are incorporated in the United Kingdom and carry on there a regulated activity of accepting deposits; and

(iii)

quote a base rate in sterling,

and for the purpose of this definition the size of any person at any time is to be determined by reference to the gross assets denominated in sterling by that person, together with any subsidiary (as defined in section 1159 of the Companies Act 2006), as shown in the audited end-of-year accounts last published before that time.]

Textual Amendments

[F9Specified amountE+W

14.—(1) This regulation applies to capital receipts which—

(a)a local authority derives from the disposal of an interest in housing land other than a disposal which is—

(i)a qualifying disposal;

(ii)a small scale disposal;

(iii)land that is the subject of an agreement made under section 80B of the Local Government and Housing Act 1989; or

(iv)a disposal to which the Schedule applies; and

(b)were received by the local authority on or after 1st April 2004.

(2) Where this regulation applies and subject to any reductions made under regulations 15 to 17, the specified amount is an amount equal to—

(a)75% of the capital receipt in relation to the disposal of a dwelling;

(b)to the extent not included in sub-paragraph (a), 75% of the capital receipt received by a local authority on or after 1st April 2006, in relation to the disposal of the authority’s rights and obligations as mortgagee of any dwelling; and

(c)50% of the capital receipt in relation to the disposal of any other interest in housing land.

(3) For the purpose of calculating the specified amount, the total amount of any reductions made to the capital receipt for a disposal under regulations 15 to 19 shall not exceed the amount of that capital receipt.]

Textual Amendments

Commencement Information

I6Reg. 14 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

[F9Capital receipt treated as reducedE+W

15.—(1) Subject to regulation 14(3) and paragraph (2), for the purposes of calculating the specified amount the capital receipt, in relation to a disposal of an interest in housing land shall be treated as reduced by—

(a)so much of the capital receipt as is applied by the local authority in meeting the administrative costs of and incidental to the disposal;

(b)the costs of expenditure incurred by the local authority in improving the housing land within the period of three years ending on the date of the disposal; and

(c)an amount, by which the authority determines that it shall be reduced, which may be any amount up to the value of the local authority’s available capital allowance at the time the specified amount is calculated.

(2) Paragraph (1)(c) shall not apply to capital receipts which a local authority derives from the disposal of a dwelling made prior to 1 April 2012—

(a)under Part V of the Housing Act 1985 (right to buy); or

(b)in accordance with a relevant consent, to a person who, when he acquires that dwelling, occupies or intends to occupy the dwelling as his only or principal home.

(3) Paragraph (1)(c) shall not apply to capital receipts received by a local authority on or after 1st April 2006, which the local authority receives from the disposal of the authority’s rights and obligations as mortgagee of a dwelling, where that dwelling (“the disposed dwelling”) was disposed of by the authority—

(a)under Part V of the Housing Act 1985 (right to buy); or

(b)in accordance with a relevant consent, to a person who, when he acquires that dwelling, occupies or intends to occupy the dwelling as his only or principal home.

(4) For the purposes of paragraphs (2)(b) and (3)(b), “relevant consent” means a consent to a disposal of land given by the Secretary of State generally under section 32 or 43 of the Housing Act 1985 (disposal of land held for housing purposes).]

Textual Amendments

Commencement Information

I7Reg. 15 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

[F9Available capital allowanceE+W

16.  For the purpose of regulation 15(1)(c), the value of the local authority’s available capital allowance at a particular time is the value of the total capital allowance at that time, as determined by the authority in accordance with regulation 17, less the total value of any amounts by which capital receipts have been treated as reduced by virtue of regulation 15(1)(c) since 1st April 2012.]

Textual Amendments

Commencement Information

I8Reg. 16 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

Available Social HomeBuy allowanceE+W

F916A.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Total Social HomeBuy allowanceE+W

F916B.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F9Total capital allowanceE+W

17.—(1) Subject to paragraph (4), for the purposes of regulation 16, a local authority’s total capital allowance is the total value of—

(a)the notifiable allowance;

(b)the amount of the contributions which the authority has made, or has decided to make but has not yet made, on or after 1 April 2012, towards the costs of the projects specified in regulations 18 or 19 by—

(i)constructing or improving dwellings, or providing dwellings by the conversion of a building or part of a building;

(ii)making a gift of land;

(iii)paying a contribution, grant or subsidy under any power conferred on the authority by or under any enactment; or

(iv)giving consideration for any benefit that the authority has received, or will receive, by virtue of the project; and

(c)any amount of capital receipt to which regulation 14 applies used to reduce the housing debt of the local authority.

(2) For the purposes of paragraph (1)(b)(ii), the authority makes a gift of land where it transfers an interest in land and either—

(a)no consideration falls to be given for the transfer; or

(b)the value of the consideration that falls to be given for the transfer is less than the price that the interest transferred would realise at the date of the valuation if sold by the authority on the open market.

(3) For the purposes of paragraph (1)(c), the housing debt of a local authority means the housing debt calculated in a determination made under section 171 of the Localism Act 2011.

(4) The total capital allowance shall not include any expenditure—

(a)already included in the calculation of the total capital allowance; or

(b)by which a capital receipt has been treated as reduced under regulation 15(1)(c).]

Textual Amendments

Commencement Information

I9Reg. 17 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

[F9Provision of affordable housingE+W

18.—(1) In these Regulations, “provision of affordable housing” means the provision of dwellings to meet the housing needs, as identified by the local authority, of persons on low incomes, whether provided by the authority or a private registered provider of social housing.

(2) For the purposes of regulation 17(1)(b), the provision of affordable housing is a specified project.]

Textual Amendments

Commencement Information

I10Reg. 18 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

[F9Regeneration projectsE+W

19.—(1) In these Regulations, “regeneration project” means any project for the carrying out of works or activities on any land where—

(a)the land or a building on the land is vacant, unused, under-used, ineffectively used, contaminated or derelict; and

(b)the works or activities are carried out in order to secure that the land or the building will be brought into effective use.

(2) For the purposes of regulation 17(1)(b), the undertaking of a regeneration project on land situated within the area of the local authority is a specified project.]

Textual Amendments

Commencement Information

I11Reg. 19 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

Capital receipts reduced by costs of buying back dwellings in the preceding yearE+W

F920.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Capital receipts reduced by consideration for former new town assetsE+W

F920A.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Transitional reductions for debt-free authoritiesE+W

F921.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Non-money receiptsE+W

22.—(1) Subject to paragraphs (2) to (4), where on or after 1st April 2004 a local authority makes a disposal, other than a qualifying disposal [F10or a small scale disposal], of an interest in housing land—

(a)which is a disposal of the kind mentioned in section 9(1) (capital receipt) and the consideration for the disposal does not consist wholly of money payable to the authority; or

(b)in respect of which the authority receives otherwise than in the form of money any consideration which, if received in that form, would be a capital receipt under section 9,

the authority shall determine the amount (the “notional capital receipt”) which would have been the capital receipt if the consideration for the disposal had been wholly in money payable to the authority.

(2) Where money is payable to the authority in respect of the disposal, the notional capital receipt shall be determined by deducting the amount of that money from the amount which would have been the capital receipt if the consideration for the disposal had been wholly in money payable to the authority.

(3) Where the consideration for the disposal, or part of the consideration, consists of —

(a)the grant of a right to the local authority to nominate a person either to occupy any dwelling or to acquire the freehold of, or a leasehold interest in, any dwelling; or

(b)an undertaking given to the local authority to allow only a person of a particular description to occupy any dwelling or acquire the freehold of, or a leasehold interest in, any dwelling,

the amount of the notional capital receipt in respect of that consideration or that part of the consideration, as the case may be, shall be treated as nil.

(4) For the purposes of determining the notional capital receipt for a disposal, the consideration for the disposal shall be deemed to be received by the authority at the time that the authority makes the disposal.

(5) For the purposes of Chapter 1 of Part 1, a notional capital receipt shall be treated as a capital receipt and the amount specified in regulation 12(4) shall be calculated accordingly.

Textual Amendments

Commencement Information

I12Reg. 22 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

MISCELLANEOUSE+W

Use of capital receiptsE+W

23.  Capital receipts may only be used for one or more of the following purposes—

(a)to meet capital expenditure;

(b)to repay the principal of any amount borrowed;

(c)to pay a premium charged in relation to any amount borrowed;

(d)to meet any liability in respect of credit arrangements, other than any liability which, in accordance with proper practices, must be charged to a revenue account;

(e)to meet the F11... costs of or incidental to a disposal of an interest in housing land; or

(f)to make a payment to the Secretary of State under regulation 12 or 13; F12...

F13(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F14(h)to meet the costs of or incidental to a disposal of an interest in land other than housing land, provided these do not exceed 4% of the capital receipt arising from the disposal; or

(i)to make all or part of a payment to a person, where the obligation to make that payment arises on the disposal of an asset, as a result of an agreement made at the time of the acquisition of that asset, or in relation to such an agreement.]

Textual Amendments

Commencement Information

I13Reg. 23 in force at 1.1.2004 for specified purposes and 1.4.2004 in so far as not already in force, see reg. 1(1)

(1)

See section 16 (“capital expenditure”) and regulations 25 and 26.

(2)

1985 c. 68; Schedule 6A was inserted by section 117(2) of, and Schedule 16 to, the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28). There are amendments to Schedule 6A that are not relevant to these Regulations.

(3)

See regulation 22 for meaning of “notional capital receipt”.

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