SUMMARY/PURPOSE

1. To seek the Executive’s recommendations regarding the provisions of the Local Government Act 2003 in relation to Council Tax discount on second homes.

CONFIDENTIAL/EXEMPT ITEMS

2. Not Applicable

BACKGROUND

3. Owners of second homes currently have a mandatory right to a 50% discount on Council Tax payable in respect of the second home.

4. The Local Government Act 2003 gives the Secretary of State powers to make regulations allowing billing authorities to reduce the discount on prescribed classes of property. It is understood that regulations will shortly be introduced which will permit the discount to be reduced to as low as 10% of Council Tax Payable, with effect from April 2004.

STRATEGIC CONTEXT

5. The provision of the new bill enables local authorities to determine the rate of discount and the amount that all local property owners contribute to the cost of Council service provision.

CONSULTATION

6. The introduction of the provisions of the Local Government Act and the introduction of the new regulations was subject to national consultation with local authorities and their representative organisations.

FINANCIAL/BUDGET IMPLICATIONS

7. Any additional monies arising from a reduction in the level of discount, would be retained locally. There are currently over 4000 such properties on the island and a potential income in the region of £1million, if a 10% discount was introduced and all associated Council Tax could be collected. Detailed regulations are still being drafted and the likely level of income cannot be determined at this time.

LEGAL IMPLICATIONS

8. The Local Government Act 2003 provides for the introduction of regulations to enable a reduction in the level of discount on second homes. The regulations are expected to be in force by December 2003.

OPTIONS

9. (i) To maintain discount on Council Tax in respect of Second Homes at 50%.

(ii) To reduce the level of discount on second homes to 10%.

(iii) To introduce a different level of discount on second homes.

EVALUATION/RISK MANAGEMENT

10. Detailed regulations are still awaited and the impact of applying a change in discount will be dependant on decisions taken by the owners of second homes on the Island. A reduction in the demand for second homes may reduce money brought into the local economy by such owners, but may lead to a greater number of properties being available for local ownership.

RECOMMENDATIONS

11. (i) That the Executive recommend to Council that it exercises the power to set the level of discount on second homes.

(ii) That a final decision on the level of discount be taken following the budget consultation process.

(iii) As part of that process the Council should seek to maximise revenue in the support of its policy objectives, for example those in relation to social housing.

BACKGROUND PAPERS

12. Local Government Act 2003

Council Taxbase

Contact Point : Gareth Hughes, Financial Services Manager

[email protected]

( 01983 823604

P WILKINSON

Chief Financial Officer

R BARRY