Community Infrastructure Levy

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.

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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.

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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.

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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.

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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.

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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.

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Reliefs, notices, surcharge

There are many different reliefs/notices/surcharges/appeals which are related to Community Infrastructure Levy payments:

Reliefs: Reg 42 Buildings of less than 100m2 (but not new dwellings of that size). Reg 42A/B/C Relief for residential extensions (up to 110m2). Reg 43 Charities. Reg 44 Ditto Reg 46/47/48 Charities procedure. Reg 49 Social housing relief. Reg 49A Discretionary housing relief. Reg 49B Procedure. Reg 49C Communal social housing relief. Reg 51/52/53/54 Social housing relief procedure. Reg 54A Relief for self-build housing. Reg 54B/C/D Ditto procedure. Reg 55/56/57/58 Exceptional circumstance relief never happens. Reg 58A Carry over of residential annex/self- build/charity/social housing reliefs on an S73 application.

Notices: Reg 64 and 64A Apply to development granted by way of general consent. Reg 65 Liability notice Reg 67 Where planning permission is granted for a chargeable development, a commencement notice must be submitted to the collecting authority no later than the day before the day on which the chargeable development is to be commenced. Reg 68 Deemed commencement if no notice served. Reg 69 Demand noticed. Reg 69A Suspension of demand notice (where no material commencement in fact). Reg 68B Instalment policies. Reg 70 Payment periods. Reg 71 Payment in full is no assumption of liability or no commencement notice accepted by Council. Reg 74A Abatement for Section 73 application, only additional area if CIL paid already. Reg 74B Abatement where CIL paid for development A — carried forward to development B. Reg 75 Overpayment where amount paid is in excess of liability.

Surcharges: Reg 80 £50 on failure to assume liability. Reg 82 20% or £2,500 on failure to submit a notice of chargeable development (for general development). Reg 83 Ditto for chargeable development. Reg 84 20% surcharge for failure to advise no longer entitled to reliefs. Reg 85 5% surcharges for late payment at 30 days/6 months/12 months. Reg 86 20% surcharge for failing to provide information. Reg 87 Late payment interest. Appeals: Reg 113 Request for a review to be made within 28 days of liability notice. Reg 114 Appeal from reg 113 review to the appointed person - within 60 days of original liability notice. No appeal if the development has already commenced — unless permission granted after commencement. Reg 116 Charity appeal — with 28 days of notice. Reg 116A Residential annex appeal — with 28 days of notice. Reg 11613 Self-build appeal — with 28 days of notice. Reg 117 Surcharge appeal — with 28 days of notice. Reg 118 Deemed commencement appeal — with 28 days of notice. Reg 119 Stop notice appeal. Reg 120 Procedure for appeal to Secretary of State.

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.

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