Explanatory note

The Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (S.I. 2003/3146) (the “2003 Regulations”) make provision for capital finance and accounts under Part 1 of the Local Government Act 2003 (c. 26) (“the 2003 Act”). Regulation 25 of the 2003 Regulations provides for expenditure which is, and which is not, to be treated as capital expenditure for the purposes of Chapter 1 of Part 1 of the 2003 Act. Since 2004, regulation 25 has excluded local authority investments in money market funds from treatment as capital expenditure in local authority accounts. Regulation 30K of the 2003 Regulations provides for specific accounting treatment for fair value gains and losses of local authority investments in pooled investment funds, including money market funds. Regulations 25 and 30K were amended by the Local Government (Miscellaneous Amendments) (EU Exit) Regulations 2018 (S.I. 2018/1386) and the Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2019 (S.I. 2019/396) to provide that investments in certain collective investment schemes (“UCITS”) were to be treated in the same way as money market funds for the purposes of regulations 25 and 30K.

These Regulations make amendments to the 2003 Regulations which are consequential on the Financial Services Act 2021 (c. 22). Regulation 2(2)(b) amends the definition of “relevant period” to reflect the extension of the temporary marketing permissions regime. Regulation 2(2)(c) amends the definition of “relevant UCITS” to give effect to the new regime for the recognition of overseas funds (including certain UCITS) introduced by the Financial Services Act 2021.

Regulation 2(2)(a), (3) and (4) revokes the definition of “money market funds” and remove references to this term in the 2003 Regulations, on the basis that it is redundant (as in all cases a money market fund to which regulation 25(3) and 30K(1) applied would also be a “relevant UCITS”).

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.