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

PART 7 E+W ACCOUNTS

[F1 Accounting for capital expenditure E+W

29A.   Where expenditure of a local authority—

(a) is expenditure which falls to be capitalised in accordance with proper practices (“capital expenditure”); or

(b) is treated as being capital expenditure by virtue of regulations made, or a direction given, under section 16(2),

that expenditure need not be charged to a revenue account of the local authority.]

Textual Amendments

F1 Reg. 29A inserted (1.4.2007) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573), regs. 1(1), 4

Retirement benefits E+W

30.  For a financial year beginning on or after 1st April 2004, a local authority shall charge to a revenue account an amount equal to the retirement benefits payments and contributions to pension funds which are payable for that financial year in accordance with the [F2 statutory requirements mentioned in] regulation 4(2).

Textual Amendments

F2 Words in reg. 30 substituted (31.3.2010) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010 (S.I. 2010/454), regs. 1(1)(a), 3(3)

Modifications etc. (not altering text)

C1 Reg. 30 applied by S.I. 2004/1778, art. 23A (as inserted (25.6.2009) by The Chilterns Area of Outstanding Natural Beauty (Establishment of Conservation Board) (Amendment) Order 2009 (S.I. 2009/1578), arts. 1(b), 2)

Commencement Information

I1 Reg. 30 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)

[F3 Back payment following unequal pay E+W

30A.— (1) For the purposes of this regulation—

(a) a reference to an employee of a local authority includes a reference to a former employee, an officer or a former officer of the authority;

(b) a reference to the contract under which an employee was or is employed includes a reference to the terms of appointment under which an officer held or holds office; and

(c) an employee of a local authority received unequal pay when the amount of pay he received from the authority for work done by him during a particular period is less than the appropriate amount of pay for that work done during that period.

(2) In this regulation—

“appropriate amount of pay”, in relation to an employee of a local authority, means the amount of pay to which the employee is entitled in accordance with any equality clause deemed to be included, by virtue of section 1(1) of the Equal Pay Act 1970, in the contract under which he was or is employed;

“back payment” means a payment of arrears of remuneration made by a local authority, for work—

(a)

done by an employee of the authority;

(b)

in respect of which the employee received unequal pay; and

(c)

done before the employee first receives any increase in pay as a result of receiving that unequal pay,

which is paid to the employee, or part of which is paid to the employee (“the net payment”) and part of which is paid to another person on behalf of the employee (“relevant deductions”), because the employee received unequal pay for that work; and

“social security costs” means any contributions by a local authority to any state social security or pension scheme, fund or arrangement.

(3) Where a local authority—

(a) is required by an employment tribunal or a court to make a back payment;

(b) (i) considers that it is probable that an employment tribunal or a court will require it to make a back payment; and

(ii) is able to make a reasonable estimate of the amount of such back payment;

(c) has reached an agreement or otherwise determined to make a back payment; or

(d) (i) considers that it is probable that it will reach an agreement or otherwise determine to make a back payment; and

(ii) is able to make a reasonable estimate of the amount of such back payment,

paragraph (4) shall apply.

(4) Where this paragraph applies, the authority need not charge to a revenue account an amount in respect of—

(a) the back payment; or

(b) social security costs or other costs incurred by the authority in relation to that back payment,

until the date on which the authority must pay that back payment, or the net payment, to the employee (as required by the tribunal or court or in accordance with the agreement or determination, as the case may be).]

[F4 (5) Subject to paragraph (6), this regulation ceases to have effect on [F5 1st April 2018].

(6) Where paragraph (4) applies to an amount, it continues to apply until the date on which the payment is actually made, whether or not the date is on or after [F6 1st April 2018].]

Textual Amendments

F3 Reg. 30A inserted (30.3.2007) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573), regs. 1(1), 5(2)

F4 Reg. 30A(5)(6) inserted (1.4.2010) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010 (S.I. 2010/454), regs. 1(1)(b), 6

F5 Words in reg. 30A(5) substituted (1.4.2013) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2013 (S.I. 2013/476), regs. 1(3), 6

F6 Words in reg. 30A(6) substituted (1.4.2013) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2013 (S.I. 2013/476), regs. 1(3), 6

[F7 Early repayment of loans – premiums and discounts at 31st March 2007 E+W

30B.— (1) This regulation applies where—

(a) before 1st April 2007 a local authority repays a loan of money before the date on which the authority is required, in accordance with the terms of the loan, to fully repay the whole or the remaining part of it;

(b) as a consequence of such early repayment—

(i) the authority is required to pay a premium to the lender of the loan or is required, in accordance with proper practices, to account for an amount in respect of a premium as if it were required to pay such a premium; or

(ii) the lender of the loan gives the authority a discount on the loan or the authority is required, in accordance with proper practices, to account for an amount in respect of a discount as if the lender had given the authority such a discount; and

(c) (i) in the case of a premium, an amount in respect of the premium included, in accordance with proper practices, in the authority’s balance sheet at 1st April 2007 is less than the amount so included immediately before that date;

(ii) in the case of a discount, an amount in respect of the discount included, in accordance with proper practices, in the authority’s balance sheet at 1st April 2007 is less than the amount so included immediately before that date.

(2) This regulation does not apply in relation to an amount in respect of a discount where, before 1st April 2007, a local authority credited the total amount of the discount to a revenue account in accordance with proper practices or with proper accounting practices which the authority was required to follow at that time.

(3) Subject to paragraphs (4) and (5), where this regulation applies, in each relevant year, the amount that a local authority shall charge to a revenue account for that year in respect of the premium or credit to a revenue account for that year in respect of the discount, as the case may be—

(a) in the case of a premium, shall be an amount which is the same as or greater than the amount calculated in accordance with the formula specified in paragraph (6);

(b) in the case of a discount, shall be an amount which is the same as or less than the amount calculated in accordance with that formula.

(4) In the case of a premium, where, in relation to a relevant year, the result of the calculation of the formula specified in paragraph (6) is nil, the authority shall not charge any amount to a revenue account for that year in respect of the premium.

(5) By the end of the final year, the total amount charged by the authority to a revenue account in respect of the premium or credited by the authority to a revenue account in respect of the discount shall equal the amount of the premium or the discount, as the case may be.

(6) The formula specified for the purposes of paragraphs (3) and (4) is—

where—

“A” is—

(a)

in the case of a premium, the amount in respect of the premium included in the local authority’s balance sheet immediately before 1st April 2007 less the amount in respect of the premium included in the authority’s balance sheet at 1st April 2007;

(b)

in the case of a discount, the amount in respect of the discount included in the local authority’s balance sheet immediately before 1st April 2007 less the amount in respect of the discount included in the authority’s balance sheet at 1st April 2007;

“B” is the total of—

(a)

in the case of a premium—

(i)

any amounts charged to a revenue account before the current year, by virtue of this regulation, in respect of the premium; and

(ii)

any capital receipts used on or after 1st April 2007 to pay any part of the premium;

(b)

in the case of a discount, any amounts credited to a revenue account before the current year, by virtue of this regulation, in respect of the discount; and

“C” is the number of financial years from the current year to the final year inclusive.

(7) In this regulation, any reference to an amount included in an authority’s balance sheet shall, if no such amount was included, be construed as a reference to nil.

(8) In this regulation—

“current year” means the financial year for which the local authority is calculating the amount to charge or credit to its revenue account in accordance with this regulation;

“final year” means—

(a)

in the case of a premium—

(i)

the financial year in which the whole or the remaining part of the loan would have been due to be fully repaid in accordance with the terms of the loan if the loan had not been repaid before that financial year; or

(ii)

if later, the financial year in which the whole or the remaining part of any replacement loan (or, if more than one, the replacement loan which is due to be fully repaid last) is due to be fully repaid in accordance with the terms of the replacement loan;

(b)

in the case of a discount—

(i)

the financial year in which the whole or the remaining part of the loan would have been due to be fully repaid in accordance with the terms of the loan if the loan had not been repaid before that financial year; or

(ii)

if earlier, the financial year which ends on 31st March 2016;

“relevant year” means the financial year which begins on 1st April 2007 and each subsequent financial year until, and including, the final year; and

“replacement loan” means any loan of money to the local authority some or all of which the authority treats, for accounting purposes, as a replacement for some or all of the loan referred to in sub-paragraph (a) of paragraph (1).]

Textual Amendments

F7 Regs. 30B-30D inserted (1.4.2007) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573), regs. 1(1), 6

[F7 Early repayment of loans – premiums and discounts after 31st March 2007 E+W

30C.— (1) This regulation applies where—

(a) a local authority repays a loan of money on or after 1st April 2007 but before the date on which the authority is required, in accordance with the terms of the loan, to fully repay the whole or the remaining part of it;

[F8 (b) as a consequence of such early repayment—

(i) the authority is required to pay a premium to the lender of the loan or is required, in accordance with proper practices, to account for an amount in respect of a premium as if it were required to pay such a premium; or

(ii) the lender of the loan gives the authority a discount on the loan or the authority is required, in accordance with proper practices, to account for an amount in respect of a discount as if the lender had given the authority such a discount; and]

(c) the authority is not required, in accordance with proper practices, to include an amount in respect of the premium or the discount, as the case may be, in its balance sheet on or after 1st April 2007.

(2) Subject to paragraphs (3) and (4), where this regulation applies, in the initial year and in each subsequent financial year until, and including, the final year, the amount that the authority shall charge to a revenue account for that year in respect of the premium or credit to a revenue account for that year in respect of the discount, as the case may be—

(a) in the case of a premium, shall be an amount which is the same as or greater than the amount calculated in accordance with the formula specified in paragraph (5);

(b) in the case of a discount, shall be an amount which is the same as or less than the amount calculated in accordance with that formula.

(3) In the case of a premium, where, in relation to a financial year referred to in paragraph (2), the result of the calculation of the formula specified in paragraph (5) is nil, the authority shall not charge any amount to a revenue account for that year in respect of the premium.

(4) By the end of the final year, the total amount charged by the authority to a revenue account in respect of the premium or credited by the authority to a revenue account in respect of the discount shall equal the amount of the premium or the discount, as the case may be.

(5) The formula specified for the purposes of paragraphs (2) and (3) is—

where—

“D” is the amount of the premium or the amount of the discount, as the case may be;

“E” is the total of—

(a)

in the case of a premium—

(i)

any amounts charged to a revenue account before the current year, by virtue of this regulation, in respect of the premium; and

(ii)

any capital receipts used to pay any part of the premium;

(b)

in the case of a discount, any amounts credited to a revenue account before the current year, by virtue of this regulation, in respect of the discount; and

“F” is the number of financial years from the current year to the final year inclusive.

(6) In this regulation—

“current year” means the financial year for which the local authority is calculating the amount to charge or credit to its revenue account in accordance with this regulation;

“final year” means—

(a)

in the case of a premium—

(i)

the financial year in which the whole or the remaining part of the loan would have been due to be fully repaid in accordance with the terms of the loan if the loan had not been repaid before that financial year; or

(ii)

if later, the financial year in which the whole or the remaining part of any replacement loan (or, if more than one, the replacement loan which is due to be fully repaid last) is due to be fully repaid in accordance with the terms of the replacement loan;

(b)

in the case of a discount—

(i)

the financial year in which the whole or the remaining part of the loan would have been due to be fully repaid in accordance with the terms of the loan if the loan had not been repaid before that financial year; or

(ii)

if earlier, the ninth financial year after the initial year (counting the financial years, immediately following the initial year, consecutively);]

[F9 “initial year” means the financial year in which the loan is repaid; and

“replacement loan” means any loan of money to the local authority some or all of which the authority treats, for accounting purposes, as a replacement for some or all of the loan referred to in sub-paragraph (a) of paragraph (1).]

Textual Amendments

F7 Regs. 30B-30D inserted (1.4.2007) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573), regs. 1(1), 6

F8 Reg. 30C(1)(b) substituted (31.3.2008) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 (S.I. 2008/414), regs. 1(1), 5(a)

F9 Words in reg. 30C(6) substituted (31.3.2008) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 (S.I. 2008/414), regs. 1(1), 5(b)

[F7 Interest on loans given by local authorities E+W

30D.— (1) Where—

(a) on or after 1st April 2007, a local authority gives a loan to a person;

(b) the authority, in accordance with proper practices, includes an amount in respect of that loan in its balance sheet at the end of the financial year in which the loan is given (“the loan year”); and

(c) the amount referred to in sub-paragraph (b) is less than the amount of the loan outstanding at the end of the loan year,

paragraph (3) shall apply.

(2) Where—

(a) a local authority gave a loan to a person before 1st April 2007 and the whole or any remaining part of the loan is outstanding on or after 1st April 2007;

(b) the authority, in accordance with proper practices, includes an amount in respect of that loan in its balance sheet at the end of the financial year which began on 1st April 2007 (“the 2007 financial year”); and

(c) the amount referred to in sub-paragraph (b) is less than the amount of the loan outstanding at the end of the 2007 financial year,

paragraph (3) shall apply.

(3) Where this paragraph applies, the amount of the interest, if any, in respect of the loan, which the local authority credits to its revenue account—

(a) (i) where the loan was given on or after 1st April 2007, in the loan year; or

(ii) where the loan was given before 1st April 2007, in the 2007 financial year; and

(b) in each subsequent year until, and including, the financial year in which the whole or any remaining part of the loan is fully repaid,

shall be the amount of the interest, if any, which it is due to receive in that year in accordance with the loan agreement for that loan.]

Textual Amendments

F7 Regs. 30B-30D inserted (1.4.2007) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573), regs. 1(1), 6

[F10 Interest on stepped interest rate loans taken out by local authorities E+W

30E.— (1) This regulation applies where on any day before 9th November 2007 a local authority had taken out a stepped interest rate loan.

(2) The local authority shall charge to a revenue account for each financial year beginning with the financial year ending on 31st March 2008 and ending with the last financial year in which the loan agreement subsists—

(a) the amount of the interest, if any, which it is due to pay in that financial year in accordance with the loan agreement; or

(b) an amount calculated in accordance with the accounting practices identified in regulation 31.

(3) In this regulation, “stepped interest rate loan” means a loan taken out by a local authority at an interest rate which increases in one or more increments during the period for which the loan agreement subsists.]

Textual Amendments

F10 Regs. 30E, 30F inserted (31.3.2008) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 (S.I. 2008/414), regs. 1(1), 6

[F10 Financial guarantees given by local authorities E+W

30F.— (1) This regulation applies where on any day before 9th November 2007 a local authority had given a financial guarantee on behalf of another person.

(2) The amount the local authority charges to a revenue account with respect to the guarantee for each financial year beginning with the financial year ending on 31st March 2008 and ending with the last financial year in which the risk guaranteed subsists shall be calculated either—

(a) in accordance with proper practices for the financial year beginning on 1st April 2006; or

(b) in accordance with the accounting practices identified in regulation 31.]

Textual Amendments

F10 Regs. 30E, 30F inserted (31.3.2008) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2008 (S.I. 2008/414), regs. 1(1), 6

[F11 Impairment of certain investments E+W

30G.— (1) Where, in relation to a relevant investment, in accordance with proper practices—

(a) an impairment loss is recognised in a revenue account of the authority for the financial year beginning on 1st April 2008;

(b) an impairment loss is recognised in a revenue account of the authority for the financial year beginning on 1st April 2009; or

(c) the value of an impairment loss recognised in a revenue account of the authority for the financial year beginning on 1st April 2008 is increased in a revenue account of the authority for the financial year beginning on 1st April 2009,

the local authority may credit to a revenue account for the year in which the loss is recognised, or increased in value, any amount up to the amount of the loss.

(2) A local authority which under paragraph (1) credits an amount to a revenue account for the financial year beginning on 1st April 2008 may debit an amount of up to the value of that credit to a revenue account for the financial year beginning on 1st April 2009.

(3) Subject to paragraph (6), where—

(a) under paragraph (1) a local authority credits an amount to a revenue account for the financial year beginning on 1st April 2008; and

(b) in accordance with proper practices—

(i) the value of the impairment loss that credit relates to is reduced in the financial year beginning on 1st April 2009, and

(ii) the authority credits an amount to a revenue account for that year to recognise that reduction,

the local authority must debit to a revenue account for the financial year beginning on 1st April 2009 an amount equal to the credit mentioned in sub-paragraph (b)(ii).

(4) Subject to paragraph (6), where—

(a) under paragraph (1) a local authority credits an amount to a revenue account for the year beginning on 1st April 2008; and

(b) in accordance with proper practices, the authority credits or has credited any amount to a revenue account before 1st April 2009 in respect of interest on the relevant investment not received on or before the date of the event giving rise to the impairment loss,

the local authority must debit to a revenue account for the financial year beginning on 1st April 2008 an amount equal to the total of the amounts mentioned in sub-paragraph (b).

(5) Subject to paragraph (6), where—

(a) under paragraph (1) a local authority credits an amount to a revenue account for the year beginning on 1st April 2008 or 1st April 2009; and

(b) in accordance with proper practices, the authority credits or has credited any amount to a revenue account before 1st April 2010 in respect of interest on the relevant investment not received on or before the date of the event giving rise to the impairment loss,

to the extent it has not debited an amount under paragraph (4) in respect of the interest, the local authority must debit to a revenue account for the financial year beginning on 1st April 2009 an amount equal to the total of the amounts mentioned in sub-paragraph (b).

(6) A local authority need not under paragraphs (3) to (5) debit to a revenue account a total amount that exceeds the total amount it has credited under paragraph (1).

(7) In paragraph (6), the reference to the total amount credited under paragraph (1) is a reference to that amount as reduced by a debit under paragraph (2).

(8) Where under paragraph (1) a local authority credits an amount to a revenue account, it must debit to a revenue account for the financial year beginning on 1st April 2010 an amount equal to the value of that credit to the extent the credit has not been reversed by debits under paragraphs (2) to (5).

(9) In this regulation, a relevant investment is a local authority investment—

(a) in a bank;

(b) affected by an event in the period commencing on 1st April 2008 and ending on 26th November 2008,

other than an investment of the type described in section 17(1)(e).]

Textual Amendments

F11 Reg. 30G inserted (31.3.2009) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2009 (S.I. 2009/321), regs. 1(1), 3

[F12 Short-term accumulating compensated absences E+W

30H.   Where, in accordance with proper practices, a local authority includes an amount in respect of a liability for short-term accumulating compensated absences in its balance sheet, the authority must not charge to a revenue account an amount in respect of that liability until the date on which the liability ceases or is discharged.]

Textual Amendments

F12 Reg. 30H inserted (1.4.2010) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010 (S.I. 2010/454), regs. 1(1)(b), 7

[F13 Lease classification E+W

30I.— (1) Where, on or after 1st April 2009, a local authority receives money under an arrangement—

(a) which is in existence on, and is not treated according to proper practices as a finance lease at, 31st March 2010, and

(b) all or part of that arrangement will be treated according to proper practices as a finance lease on or after 1st April 2010,

the money received under that arrangement may be accounted for in accordance with proper practices applying to that arrangement on 31st March 2010.

(2) Where, on or after 1st April 2009, a local authority receives money under an arrangement—

(a) which is in existence on, and is not treated according to proper practices as an operating lease at, 31st March 2010, and

(b) all or part of that arrangement will be treated according to proper practices as an operating lease on or after 1st April 2010,

the money received under that arrangement may be accounted for in accordance with proper practices applying to that arrangement on 31st March 2010.]

Textual Amendments

F13 Reg. 30I inserted (1.4.2010) by The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010 (S.I. 2010/454), regs. 1(1)(b), 8

Proper practices E+W

31.  For the purposes of section 21(2) (accounting practices) the accounting practices contained in the following codes of practice and guide are proper practices—

(a) “F14 ...Code of Practice on Local Authority Accounting in the United Kingdom” published by CIPFA, as amended or reissued from time to time(1);

[F15 (b) “Service Reporting Code of Practice for Local Authorities” published by CIPFA, as amended or reissued from time to time;]

[F16 (c) “in relation to parish councils only, Governance and Accountability for Local Councils: A Practitioners’ Guide 2008 (England)” published jointly by the National Association of Local Councils and the Society of Local Council Clerks, as amended or reissued from time to time.]

Textual Amendments

F14 Words in reg. 31(a) omitted (1.4.2010) by virtue of The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010 (S.I. 2010/454), regs. 1(1)(b), 9

F15 Reg. 31(b) substituted (31.3.2012) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2012 (S.I. 2012/265), regs. 1(2), 8 (with reg. 1(4))

F16 Reg. 31(c) substituted (31.3.2009) by The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2009 (S.I. 2009/321), regs. 1(1), 4

Commencement Information

I2 Reg. 31 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)

The current issue of this code of practice was published in London in 2003. ISBN 0 85299 981 X. Back [1]