Explanatory note

These Regulations amend the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (“the Principal Regulations”) and apply only in relation to local authorities in England.

Regulation 2 amends regulation 1(5) of the Principal Regulations by adding definitions of “money market fund” and “multilateral development bank” (these terms are used in regulation 25 of the Principal Regulations, as amended by these Regulations).

Regulation 3 amends the provisions in regulation 12 of the Principal Regulations concerning the pooling of capital receipts from disposals of housing land. Paragraph (3)(c) of regulation 12 is amended so that the statement required by that paragraph must be provided, and any positive balance (where the local authority underestimated how much to pay) must be paid, to the Secretary of State by “the balance payment date”. This is defined in new paragraph (6) that is added to regulation 12.

Regulation 3 also amends the provisions in paragraph (3)(d) of regulation 12 of the Principal Regulations regarding what should happen where the local authority has paid too much to the Secretary of State. In this case the local authority may offset the excess amount paid against further payments that it has to pay to the Secretary of State. However, if the local authority does not have, and will not have within a 6 month period after the balance payment date, any further payments against which it can offset the excess amount, it may notify the Secretary of State of this and the Secretary of State must repay the excess amount. If the local authority does not have, and will not have within a 3 month period after the balance payment date, any further payments against which it can offset the excess amount, and it would suffer severe financial problems, it may request the Secretary of State to refund the excess amount. If the Secretary of State is satisfied that the local authority would suffer severe financial problems if he does not repay the excess amount, he shall repay that amount.

Regulation 4 substitutes a new regulation 13 of the Principal Regulations concerning interest on payments that have not been paid on time under regulation 12. Interest is payable on late payments of the specified amount, the estimated amount or the balance at the same time as the unpaid amount is paid.

Regulation 5 amends regulation 25 of the Principal Regulations so that the payment of a levy on a disposal under the Leasehold Reform, Housing and Urban Development Act 1993 is treated as capital expenditure. Regulation 25 is also amended to exclude expenditure on the acquisition of certain types of share capital and loan capital from being treated as capital expenditure.

A full regulatory impact assessment has not been produced for this instrument, as it has no impact on the costs of businesses, charities or voluntary bodies.