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Rates (Amendment) Act (Northern Ireland) 2009

Background and Policy Objectives

3.Following the restoration of devolution in May 2007 the Executive ordered a comprehensive review of the domestic rating system, aimed at making the system of local taxation more acceptable. A number of outcomes of this review were introduced in 2008 and 2009, including a lone pensioner allowance, an increase in the savings limit for pensioners under the low income rate relief scheme, a lower maximum capital value and the closure to new applicants of the relief scheme for those in post school education or training and leaving care.

4.The Act gives effect to a number of the remaining decisions arising from the Executive’s Review, as well as three issues relating to the non domestic rating system.

5.In terms of the domestic rating reforms it is intended to introduce two schemes aimed at encouraging householders to act in a more environmentally responsible way. This was a key theme to emerge from consultation during the Review. It has also been decided to introduce the rating of empty homes at 100%, provide new powers for a rates deferment scheme for owner occupier pensioners and improve data sharing powers. The detail of each of these measures is set out in the following paragraphs.

6.The Act enables the Department of Finance and Personnel to make regulations providing for a one-off reduction in rates for owner occupiers who install loft or cavity wall insulation in their homes. The amount of the reduction will be prescribed in the regulations and the scheme itself will be time limited to 31 March 2015. This date can however be changed by subordinate legislation to allow for a second phase should it be decided, following a review of the insulation based scheme, that it should be broadened to include other measures such as solar panels, etc. The Department will also be able to extend the scheme to other sectors, including the social rented sector, through subordinate legislation should this be considered necessary in the future. The overall aim of the scheme will be to encourage investment in, and thereby improve, the housing stock in Northern Ireland which aligns with the Executive’s wider commitment to promote sustainable development.

7.The Act also provides the Department of Finance and Personnel with a power to make regulations to introduce a scheme giving full rate relief to the first occupiers of new zero-carbon and new low-carbon homes for up to five years and two years respectively. This enabling power limits the life of the scheme to 31 March 2016 in respect of new zero-carbon homes and 31 March 2013 in respect of new low-carbon homes to align with existing UK government targets. These dates can however be changed through subordinate legislation should this be required. The overall aim of this scheme will be to encourage the demand for zero-carbon and low-carbon homes and thereby stimulate developers in Northern Ireland to build them.

8.As part of its Review the Executive also agreed that the rating of empty homes should be introduced, in order to encourage people to make use of empty property and improve the availability of housing. The Act makes provision that will enable this to be introduced and to allow empty homes (including garages and storage premises) to be rated at 100%. There will be no initial exemption period (with the exception of new property developments which will be subject to an initial 12 month exemption). Given that rating empty homes now would place an unfair burden on households when the housing market is weak the rating of empty homes has been postponed until April 2011, though this will be kept under review.

9.The Executive reduced the maximum capital value that applies for domestic rating purposes to £400,000. This ensures that the maximum rate bill in Northern Ireland is no higher than the average bill within the highest council tax band in England, around £2,800. This was given effect through subordinate legislation, using existing powers in the principal Order, that is the Rates (Northern Ireland) Order 1977 (S.I. 1977/2157 (N.I. 28)). The change became operational on 1 April 2009. The Act makes provision for compensating payments to be made to district councils affected by the reduction in the maximum capital value to £400,000, in respect of the 2009/10 and 2010/11 rating years. Assistance will be provided at 100% and 50% respectively of the difference between the product of the rate for the £500,000 and £400,000 capital value thresholds.

10.As part of the wider package of measures aimed at providing assistance to pensioners the Executive also agreed that a rates deferment scheme should be introduced for owner occupiers of pensionable age. The power to introduce such a scheme is already provided for in the Rates (Northern Ireland) Order 1977, with the Act substituting this provision and slightly extending the scope of the scheme. Eligibility will be subject to the person being an owner occupier aged 60 or over (to subsequently increase in line with changes to pensionable age through to 2046). The Department of Finance and Personnel will have the power to enter into a deferment agreement with an owner occupier of pensionable age as well as the partner or surviving partner of such a person where he/she also owns and occupies the property. Further eligibility conditions will include minimum equity levels in the property with account also taken of personal circumstances. Interest will be charged on the amount outstanding under a deferment agreement and applicants will be responsible for the initial set up costs associated with entering into such an agreement.

11.In relation to data sharing, new powers are being taken in this Act to allow the relevant Government agencies to better target likely recipients of, and verify claims relating to, rate relief, the disabled persons allowance and the lone pensioner allowance, as well as for the purposes of assessing housing benefit claims for owner occupiers. It is recognised that these powers are only part of a package of measures which will collectively help address the issue of low take up of reliefs. This issue emerged from the research and analysis carried out during the Executive Review of domestic rating following which a study was commissioned by the Executive, and carried out by Access to Benefits for Older People, to inform the development of effective take up strategies. These powers will be accompanied by a number of actions at administrative level around data security, audit trail and independent scrutiny all of which featured in the responses received during the consultation on the issue last year. The Act also creates a new offence relating to the unauthorised disclosure of information pursuant on the new power dealing with certain rate reliefs and allowances.

12.In terms of the non domestic rating system there are three main areas covered. For the next revaluation exercise some changes will be needed in the legislation to facilitate this. In particular the provisions which relate to the former public utilities whose valuation assessments will move from being prescribed in legislation to the conventional method of assessment. The changes needed are largely in the form of repeals.

13.The second main area concerns industrial derating. The rating liability for the manufacturing sector currently stands at 30% and the Assembly approved placing a hold on this level until March 2011. To date this has been given effect through subordinate legislation. Provision had to be made in the primary legislation, otherwise 100% rates liability for manufacturing will apply from April 2011. This amendment provides the necessary flexibility for the Assembly to set the rating liability by subordinate legislation, post April 2011.

14.The third main provision which is required for the non domestic sector is an enabling power to allow for a small business rate relief scheme to be introduced (temporary reduction of rates for specified hereditaments). It also provides enhanced rate relief for sub Post Offices in Northern Ireland. The scheme was announced on 15 December 2008 as part of the Executive’s response to the economic downturn and as part of the December monitoring round.

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Explanatory Notes

Text created by the Northern Ireland Assembly department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes accompany all Acts of the Northern Ireland Assembly.


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