How is the Parish Council Funded?
Parish Councils are responsible for managing their own budgets and are funded principally through the annual precept. The precept is a tax, included within the local council tax, which enables the Parish Council to perform its functions.
Parish Councils can apply for other funding such as grants and funding awards, generally for specific projects, but they do not receive funds directly from central Government.
How is the Precept calculated?
The Parish Council is required (in law) to agree a budget before it can set its precept and both must be agreed by the full Parish Council.
The precept is calculated by offsetting expected income against anticipated expenditure whilst keeping enough in unallocated (general) reserves as set out in the Joint Panel for Accountability and Governance (JPAG).
Once the Parish Council has forecast its budget requirements for the following financial year, it requests this funding from its ‘local billing authority’ – in our case, Westmorland and Furness Council (WAF) – in the form of the precept.
WAF then converts the precept into an amount per Council Tax payer that is added to the Council Tax bill (according to the property band) for all the dwellings within the Parish.
The Tax Base
The Tax Base is produced from the Council Tax system at WAF. Each property is valued by the evaluation office and is allocated one of 8 valuation bands (A, B, C, D, E, F, G, H) according to its market value on 1st April 1991.
Adjustments are made to take into account any discounts that are given, for example, single occupancy, second homes or homes that are empty or exempt.
Each band is then converted to Band D equivalents as shown in the calculation below:
A = 6/9
B = 7/9
C = 8/9
D = 9/9 (base line)
E = 11/9
F = 13/9
G = 15/9
H = 18/9
(Band A is 6 ninths of Band D and Band H is twice Band D)
The estimated number of Band D properties to be built in the year are added and this gives the total number of Band D equivalent properties to use for the Council Tax Base.
The Tax Base is used to calculate the Band D charge for the parish which is done by dividing the total precept requirement by the Tax Base. This figure will be compared with the previous year’s Band D charge and supplied to the Parish.
For instance, for the 2023/24 financial year for Pennington, the Tax Base was 768.11, but the estimated Tax Base for 2024/25 is 764.4
There are a number of reasons why the Tax Base changes.
It can go up if more homes are created, but it can go down due to more properties in the town or parish claiming for discounts – most commonly an increase in the number of properties claiming the single occupancy discount.
Other factors will include homes being demolished, becoming empty, becoming second homes, boundary changes or even a change in collection date