The Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2010
S.I. 2010/454 · Made 24 February 2010
Local Government, England
Made 24th February 2010
Laid before Parliament 2nd March 2010
Coming into force in accordance with regulation 1.
The Secretary of State, in exercise of the powers conferred by sections 7(3)(c), 9(3), 11(1), 16(2)(a), 21(1) and (2), and 123(1) of the Local Government Act 2003f1, makes the following Regulations:
Annotations to the whole text
Footnotes
- f1
Contents
- 1Citation, commencement and application
- 2Amendment of regulations
- 3Retirement benefits
- 4Use of capital receipts
- 5Expenditure to be capital expenditure
- 6Back payment following unequal pay
- 7Short-term accumulating compensated absences
- 8Lease classification
- 9Proper practices
- 10Revocation
- Signature
- Explanatory note
1Citation, commencement and application
These Regulations apply in relation to local authorities in England.
2Amendment of regulations
3Retirement benefits
In regulation 4(2)f1, for the words after “payable pursuant to” to the end of the paragraph, substitute “statutory requirements under an arrangement accounted for as a defined benefit pension plan or as other long-term employee benefits (as defined in accordance with proper practices).”.
In relation to accounts prepared for the financial year beginning on 1st April 2009, paragraph (1) has effect as if for the words “defined benefit pension plan or as other long-term employee benefits” is substituted “defined benefit scheme”.
In regulation 30, for the words “legislation specified” to “sub-paragraph (b), of” substitute “statutory requirements mentioned in”.
4Use of capital receipts
In regulation 23f1—
in paragraph (e), omit the word “administrative”;
at the end of paragraph (f), omit “or”; and
after paragraph (g), insert—
“(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.”.
5Expenditure to be capital expenditure
In regulation 25(3)f1—
at the end of sub-paragraph (c), for “,” substitute “; or”; and
after subparagraph (c) insert—
“(d)the acquisition of shares in an investment scheme approved by the Treasury under section 11(1) of the Trustee Investments Act 1961 (local authority investment schemes),”.f2
6Back payment following unequal pay
In regulation 30Af1, after paragraph (4) insert—
“(5)Subject to paragraph (6), this regulation ceases to have effect on 1st April 2013.
(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 1st April 2013.”.
7Short-term accumulating compensated absences
After regulation 30Gf1, insert—
“Short-term accumulating compensated absences
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.”.
8Lease classification
After regulation 30H, insert—
“Lease classification
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.”.
9Proper practices
In regulation 31(a), omit the words “A Statement of Recommended Practice: ”f1.
10Revocation
Regulation 5(1) of the Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007f1 is revoked.
Signature
Signed on the authority of the Secretary of State for Communities and Local Government
Barbara Follett
Parliamentary Under Secretary of State
Department for Communities and Local Government
24th February 2010
Explanatory note
(This note is not part of the Regulations)
These Regulations amend the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (S.I. 2003/3146).
Regulation 3 changes the definition of retirement benefits so that instead of benefits payable under specified funds or schemes, they are defined as benefits payable under statutory requirements which are accounted for in the ways specified (in accordance with proper practices). The ways specified differ for the financial year 2009/10 and subsequent years.
Regulation 4 permits local authorities to use capital receipts 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; and also to make all or part of a payment to a person to repay money owed 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.
Regulation 5 provides that the acquisition by local authorities of shares in an investment scheme approved by the Treasury under section 11 of the Trustee Investments Act 1961 is not capital expenditure.
Regulation 6 extends until 2013 the ability of local authorities to defer charging liabilities for back pay due to equal pay claims to a revenue account until the date on which the back payment must actually be paid. Regulation 10 revokes the provision in the Local Authorities (Capital Finance and Accounting) (Amendment) (England) Regulations 2007 (S.I. 2007/573) which only permitted the deferral of charging back pay to a revenue account until the back payment was actually paid until 2011.
Regulation 7 concerns the accounting treatment for short-term accumulating absences of employees (such as entitlement to holiday or time off in lieu which has accrued but not yet been taken). Local authorities must not charge an amount in respect of liability for such entitlements to a revenue account until the date on which the liability ceases.
The accounting treatment for leases under proper practices is changing for the financial year 2010/11, which may lead to some existing financial arrangements being classified as operating or finance leases which were not previously so classed, with the result that the arrangements would be subject to different accounting treatment under proper practices. Regulation 8 provides that local authorities may continue to apply the accounting treatment that applies to such financial arrangements on 31st March 2010 for subsequent financial years.
Regulation 9 updates the title of one of the documents identified by the Secretary of State as constituting proper practices, in relation to the accounting practices for the accounts of a local authority.
An impact assessment has not been produced for this instrument as no impact on business or the private or voluntary sectors is foreseen.