Setting the precept is the one decision a parish council makes every year that every household in the parish pays for. It is also the one that gets done in a hurry in January because nobody started in October. The timetable below is the one that avoids that.
What the precept is
Parish councils don’t collect council tax. The billing authority (the district, borough or unitary council) collects it and passes on the amount the parish council asked for. That amount is the precept. The council decides it; the billing authority doesn’t check whether it’s reasonable, and there is no cap on parish precepts: the 2026/27 local government finance settlement confirmed that referendum limits won’t apply to parish and town councils for the three years to 2028/29, though the government reviews that each year and has kept the option open.
The figure residents actually see is the Band D amount: the precept divided by the parish’s tax base. The tax base is the number of Band D-equivalent properties in the parish after discounts and exemptions, and the billing authority calculates it and sends it to you, usually in November or December. A parish with a precept of £48,200 and a tax base of 1,172 has a Band D charge of £41.13 a year. That’s the number to put in the newsletter.
The timetable
October: last year’s numbers
Start from what the council actually spent in the last full year and what it has spent so far this year, from the budget monitoring report. Note what was a one-off (the climbing frame) and what will recur (the grass cutting, which goes up every year). Check the balance of reserves: the general reserve, which the Practitioners’ Guide suggests should be somewhere between three and twelve months of spending for a small council, and any earmarked reserves the council has set aside for a particular purpose.
November: the draft budget
List every heading: the clerk’s salary and on-costs, insurance, audit fees, subscriptions, the hall hire, grass and hedges, the playground inspection and repairs, the website, elections (set money aside every year, because the bill arrives every four and it is not small), grants to village groups, and a contingency. Against each, a figure for next year with a sentence saying why. A finance committee, if the council has one, goes through it now. If it doesn’t, the full council does.
December or January: the resolution
The council resolves the budget and the precept at a properly convened meeting, with the precept on the agenda as an item in its own right, and the minute records the figure in pounds. The resolution is what the billing authority’s form asks you to confirm. The law (section 41 of the Local Government Finance Act 1992) says the precept must be issued before 1 March, but billing authorities need it earlier to set their own council tax, so their deadline is commonly in the second half of January; ask them for the date in November so it’s in the diary.
After: tell residents
Publish the budget and the precept on the website with a short explanation, particularly if it has gone up. “The precept is £48,200, up 2.9%. The increase pays for the replacement climbing frame on Mill Lane, which the annual inspection condemned, and for an election reserve.” Residents accept a rise they understand; what they resent is one they find out about from the council tax bill.
The sum
Budgeted spending, minus other income (allotment rents, hall hire, bank interest, any grant), minus reserves the council has decided to use, equals the precept. Then precept divided by tax base equals the Band D figure. Two lines, but every line in the budget above them deserves a reason.
Things councils get wrong
- Forgetting the election. An uncontested election costs little; a contested one can cost a small parish a few thousand pounds, and it is billed by the district council after the event. Put a quarter of the likely cost aside every year.
- Letting reserves drift. Too little and one failed inspection becomes a crisis. Too much and residents reasonably ask why they are being taxed to fund a bank balance. The auditor asks the same question.
- Setting the precept without the tax base. If you set a pound figure before the tax base arrives, the Band D amount is a surprise. Ask the billing authority for the provisional figure in November.
- Not minuting it properly. The minute should say the council resolved to set a precept of a stated sum for the year. “Precept agreed” is not enough when the internal auditor comes to check.
- VAT. A parish council that isn’t VAT registered can still reclaim the VAT it pays on most purchases, through form VAT126. If the last clerk wasn’t claiming, there may be several years to recover.
Where to check
The Practitioners’ Guide, published each year by the Joint Panel on Accountability and Governance, is the authoritative guide to budgeting, reserves and the annual return for smaller councils, and the internal auditor will expect you to have followed it. Your county association will have a budget template; use it, because the headings match what the AGAR asks for in June.