NALC Legal Topic Notes: Finance

This page contains Legal Topic Notes which include information on Finance.


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The relationship between village halls and local councils is, in several ways, a special one. Village halls or community centres provide a venue at low cost for a wide variety of local organisations and community activities in general. Local councils often provide financial support or give other assistance to help in the running of a village hall.


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Section 137 of the Local Government Act 1972 enables local councils to spend a limited amount of money for purposes for which they have no other specific statutory expenditure. It is however, limited in a number of ways. All community councils in Wales have the Power of Well-Being (see paragraph 21 below) but expenditure incurred in the exercise of that power is subject to the financial limit in section 137 (see paragraph 14 below). Although not possible with s.137, expenditure incurred by a community council exercising the power of well-being can be used to benefit an individual. Also section 137 cannot be used by a parish council in England that is eligible to exercise the General Power of Competence except to donate money to certain charities and appeals (Section 137(3)).




Value Added Tax (VAT) is a tax that is levied on the supply of goods and services in the course of business. ‘Business’ activities are concerned with making supplies to others (i) for any form of payment or other consideration, (ii) which have a degree of frequency and scale (iii) continue over a period of time and (iv) are within the scope of VAT which is currently levied at 3 different rates. Business transactions which attract the tax are called ‘taxable supplies’. A person making such supplies is a ‘taxable person’ and must normally be registered for VAT with HM Revenue & Customs (HMRC). ‘Non-business’ activities involve the supply of goods and services without charge or without competition in the private sector and these are outside the scope of VAT. Further guidance in respect of the non-business activities undertaken by local councils is given at paragraphs 45 to 47 below.


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The Local Authorities (Members’ Allowances) (England) Regulations 2003 (SI.2003/1021) came into force on 1st May 2003. The regulations apply to local authorities in England only and substantially change the system that previously existed.


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This LTN applies to local councils in England and Wales except for paragraphs 10-15 below which apply only to local councils in England


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