CIL is charged on many developments. Unlike affordable housing which is caveated by viability it is not negotiable. However, CIL is often miscalculated by local authorities, and the form-based process is often misunderstood which can lead to surcharges and interest being applied. Below we outline some important points to understand about CIL. If you have any queries about the CIL liability of a site you are acquiring or taking through planning, please contact us today.
What is CIL?
Community Infrastructure Levy is a charge that can be levied by Local Planning Authorities to help deliver infrastructure to support new development.Within the UK, many LPAs have adopted an CIL charging schedule that sets out the levy rates for the borough or district.
The charge was created as a ‘flat tax’ where an index linked£/m2 rate was applied to all new development. Where a charging schedule has been adopted, a CIL payment is levied on all additional floorspace over a certain level and subject to some exemptions.
Instalments
Each local planning authority will have a policy in which the CIL can be paid in instalments; however, your right to pay by instalments will be lost if you fail to assume liability and serve a commencement notice.
Credits, offsets and exemptions
The following formulae are used to determine the chargeable area:
Chargeable Area = Total Area of Development – Area of In Use Buildings
Chargeable Area = Total Area ofDevelopment – Retained Part Area
‘In-use building’ means a building which:
(i) Is a relevant building, and
(ii) Contains a part that has been in lawful use fora continuous period of at least six months within the period of three years ending on the day planning permission first permits the chargeable development.
‘Retained part’ means part of a building which will be:
(i) On the relevant land on completion of the chargeable development (excluding new build)
(ii) Part of the chargeable development on completion, and
(iii) Chargeable at rate R.
Both of these credits are determined at the date permission is granted – never demolish your building prior to obtaining planning consent as this results in a loss of any offset and potentially large additional costs.
There are multiple exemptions and reliefs that are sometimes provided for minor developments, residential annexes and extensions, and buildings uses by charities. Some reliefs are also provided for social housing and self builds. It is essential to claim these exemptions and reliefs before any form of activity is started on site as you cannot claim them retrospectively; reliefs can also be lost if you depart from your planning permission without obtaining new consent.
Process, penalties and surcharges
Before any development that has been authorised commences, a notice of chargeable development must be submitted to the collecting authority– if you do not provide the commencement notice there is a surcharge of 20% on top of the basic liability.
If planning permission is granted for a chargeable development, a commencement notice must be submitted to the local planning authority not later than the day before the day on which the chargeable development is to be commenced.
Once a commencement notice has been received, or a development has not notified the LPA of commencement on site, the collecting authority must serve a demand notice. There is a penalty of 20% if no notice of commencement is filed. If the chargeable amount changes, the LPA must issue a revised demand notice, therefore, if it is wrong for any reason, you can ask for it to be amended outside the review and appeal provisions noted above.
The above illustrates the complexity of the CIL process, which is often underestimated, and the importance financially of getting it right, particularly on larger developments.
S73 variations
If a planning application is granted through an S73 (not S73A retrospective permissions), abatements will enable developers to pay for only the additional areas. Readers should note that where a pre CIL permission is held with zero liability, a subsequent post CIL permission will not enjoy any credit by virtue of the earlier permission.
Challenges
If you disagree with the chargeable CIL amount, you can ask the LPA to review the calculation within 28 days of the receipt of the liability notice – you can also appeal to the planning inspectorate with 60 days. However, if the chargeable development has commenced, you cannot appeal as it will lapse the CD after the appeal is lodged.
Reliefs, notices, surcharge
There are many different reliefs/notices/surcharges/appeals which are related to Community Infrastructure Levy payments:
Our CIL experts can advise on CIL liability, exemptions, surcharges, appeals and calculations. While CIL is non-negotiable in 90% of cases we have assisted clients in reducing their initially calculated liability. Please contact us today for a free consultation.
