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

[F1 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;

[F2 (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);]

[F3 “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

F1 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

F2 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)

F3 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)