CIL stands for Community Infrastructure Levy, which is a charge (tax) placed on new development in England, with the funds collected going towards paying for infrastructure needed to support new development in an area. For example, schools, roads, community facilities etc.
The amount to be paid varies from development to development. The calculation of the levy is based on the type of development and the amount of floorspace proposed. Local authorities charge their own locally set rates, which leads to variation in the cost of CIL across the country.
Not all local authorities in England use CIL as a means of funding infrastructure linked to development. In those areas, payments towards infrastructure will instead be secured using ‘Section 106’ legal agreements (also known as developer contributions/obligations), negotiated on a case-by-case basis.
There are various CIL reliefs and exemptions that can be applied for by developers – for instance where affordable housing is to be provided, or if the development is ‘self-build’ or being undertaken by a registered charity etc. Discounts are also applied where existing floorspace is being demolished.
Working out whether CIL is to be paid and the amount due is not an easy thing to determine. There are strict requirements for filling in the correct forms and giving information at the right stages to ensure that the correct amount is paid and any reduction in costs due through reliefs and exemptions are secured.
DO I NEED TO PAY CIL?
Most new development which creates net additional floor space of 100 square metres or more, or creates a new dwelling, is potentially liable to pay CIL.
The first thing to do is check with your local planning authority who will be able to inform you whether it has adopted the levy. A search on their website is a good starting point.
HOW MUCH DOES CIL COST?
Once you have determined whether CIL is active in your area, review the Charging Schedule to determine the costs that apply to the type of development proposed, if any.
All local authorities that charge CIL are required to publish a Charging Schedule on their website. The Charging Schedule sets out the levy rates for a charging authority area along with any policies that apply in terms of payment by instalments or exceptional circumstances relief etc.
Levy rates are expressed as pounds (£) per square metre.
Some authorities have different charging zones applying varying rates for the same type of development depending on where it is located. Check the Charging Schedule and speak to the LPA if you have any doubt or queries – most will have a dedicated CIL officer who will be able to help.
Some developments can be eligible for relief or exemption from CIL. This includes residential annexes and extensions, and houses and flats which are built by ‘self-builders’. There are strict criteria that must be met, and procedures that must be followed, to obtain reliefs or exemptions.
In most circumstances, existing floorspace to be retained or demolished on a development site can be used to reduce the net increase in floorspace subject to CIL. Check with your LPA when completing the necessary forms to see whether those provisions apply to your development.
APPLYING FOR CIL RELIEF OR EXEMPTIONS
The following types of development do not attract CIL:
- development of less than 100 square metres, unless this consists of one or more dwelling and does not meet the self-build criteria below, in which case the levy is payable;
- buildings into which people do not normally go;
- buildings into which people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery;
- structures which are not buildings, such as pylons and wind turbines;
- specified types of development which local authorities have decided should be subject to a ‘zero’ rate and specified as such in their charging schedules.
There are also situations where an exemption or relief from CIL can be applied for by a developer:
- residential annexes and extensions where an exemption has been applied for and obtained prior to commencement of the development;
- ‘self-build’ houses and flats, which are built by ‘self-builders’ where an exemption has been applied for and obtained prior to commencement of the development;
- social housing that meets the relief criteria and where an exemption has been applied for and obtained prior to commencement of the development;
- charitable development that meets the relief criteria and where an exemption has been applied for and obtained prior to commencement of the development.
Where the levy liability is calculated to be less than £50, the chargeable amount is deemed to be zero, so no levy is due.
Mezzanine floors, inserted into an existing building, are not liable for the levy unless they form part of a wider planning permission that seeks to provide other works as well.
WHO PAYS CIL?
Where CIL is chargeable, there is a legal obligation to pay it and it is not negotiable. Anybody involved in a new development can take on the liability to pay the CIL charge but ultimately, if nobody else takes on this liability, it falls to the landowner to pay.
If your development is liable for CIL, you will need to send the Charging Authority specific forms and notices, at specific times. Failure to do this could result in penalties and surcharges (up to £2,500), as well as loss of any rights to claim payment instalments or reliefs/exemptions.
The Charging Authority can take enforcement action to collect outstanding CIL charges. In the most severe cases, this could include putting a halt on development or taking court action.
Please seek your own advice from your LPA, a planning consultant or other qualified professional if you are in any doubt about how CIL operates or how it affects your own position.
Further guidance can be found on your local authority website or by referring to the CIL Regulations 2010 (as amended).
HOW TO DEAL WITH CIL – GET IT RIGHT
The CIL Regulations 2010 (as amended) and the processes to be followed when dealing with CIL are complicated and the requirements very bureaucratic.
It is important to get the process right or else you will risk the possibility of surcharges being added to your overall levy charge.
In cases where relief or exemptions are being sought, this is particularly important – as if not followed, the full levy may end up being charged.
The complexity and bureaucracy is demonstrated by the number of ‘Forms’ currently listed on the Planning Portal website relevant to CIL:
There are several important steps to follow when submitting a planning application for development in areas where CIL is active. The key requirements (always check with your LPA along the course) are summarised below.
Step 1 – Information – Form 1
All planning applications in CIL areas require the submission of Form 1 – CIL Additional Information. This sets out existing and proposed GIA floorspace and any demolition proposed by the application.
The information provided on this form enables the LPA to determine whether CIL is payable and to calculate a chargeable amount.
Step 2 – Assuming Liability – Form 2
To benefit from payment windows and instalments etc, someone must assume liability for paying the Levy.
Landowners are ultimately liable for the levy, but anyone involved in a development may take on the liability to pay. This can be more than one company/developer for instance.
If no one assumes liability, it will automatically default to the landowner and payment becomes due as soon as development commences.
Where there are multiple parties wishing to assume liability, the portions owned must be set out at this time – CIL liability can then be divided proportionally amongst landowners or those liable.
Form 2 can be submitted at any time between submission of the planning application and commencement of the development, but it is strongly recommended that the assumption of liability form is submitted before submission of the commencement notice as a surcharge of up to £500 can apply if the LPA has to determine who is liable themselves.
Withdrawing or Transferring Liability – Forms 3 / 4
The person who has assumed liability to pay can subsequently withdraw or transfer their liability to someone else at any time prior to commencement.
Once development commences, the assumption of liability can be transferred (any time up to the date the final payment is due) but cannot be withdrawn.
Step 3 – Issue of Liability Notice (The Council)
This will be issued either at the same time, or as soon as possible, following the planning application decision notice.
The Liability Notice sets out the amount of CIL to be paid for the development.
The Liability Notice includes all relevant floorspace contained in the development, including floorspace that may be eligible for relief or exemption (see below).
Interested parties (i.e. freeholders and leaseholders), where known, will be sent a copy of the liability information. Once a Liability Notice is issued, the CIL charge will be registered on the Land Charges Register.
If you consider that the amount has been calculated incorrectly, then you can request that the Council recalculate it. If, following recalculation, you still consider the amount is incorrect you can appeal to the Valuation Office Agency (VOA).
Step 4 – Applying for Relief/Exemption (Applicant) – Forms 7 to 13 – and Determining Relief (Council)
You can apply for relief from the levy applicable to any social housing or self-build homes. However – the relief is not automatically applied, and you must make an application using the relevant forms and by submitting supporting information and/or evidence.
To be able to apply for a relief or exemption, you must:
- have assumed liability for paying CIL on the chargeable development
- apply for relief before development commences
Forms must be submitted to the Collecting Authority, and any relief must also be granted by them, prior to the commencement of the development, otherwise the full CIL charge will be payable. Absolutely no works should start on site until this has happened.
Full details of the exemptions and requirements are set out in the Regulations and on the Gov.uk website – see the National Planning Practice Guidance.
Disqualifying Events – Levy ‘Clawback’
Relief can be subject to clawback for a set period. This means that if a disqualifying event occurs, then CIL will be payable. Where relief is applied, the CIL chargeable amount and amount of relief granted, will be kept on the land charges register for 3 years following completion.
For example, if a social/affordable housing dwelling, having received relief, is sold within seven years as a market house, CIL will be due immediately.
If a disqualifying event occurs, you must notify the Council in writing within 14 days of the event. If this is not done, a surcharge will be applied in addition to the levy. A copy of the notification must be sent to all owners of material interests in the relevant land.
It is the responsibility of the person(s) who received the relief to pay the CIL amount (ie the liability falls on the person who owned the land immediately prior to the dwelling being made available for occupation). The current occupants of a dwelling should therefore never pay the ‘clawback’.
If the development is sold you must notify the Council.
Step 5 – Commencement Notice (Form 6)
At least one day before commencement starts, you must submit a commencement notice to the Council. This states when the development is going to commence and forms the basis of the dates that CIL payments will become due.
Commencement and implementation of a planning permission is as per section 56(4) of the Town and Country Planning Act 1990 – commencement includes:
- any work of construction in the course of the erection of a building
- any work of demolition of a building
- the digging of a trench which is to contain the foundations, or part of the foundations, of a building
- the laying of any underground main or pipe to the foundations, or part of the foundations, of a building or to any such trench as mentioned above
- any operation in the course of laying out or constructing a road or part of a road
- any change in the use of any land which constitutes material development
Failure to submit the form prior to commencement, or not at all, removes any rights to be able to pay by instalments, and/or you will lose any relief or exemption.
Step 6 – Demand Notice (Council)
The Demand Notice will set out the date that CIL must be paid by (in most cases, you will have at least 60 days to pay from the date of commencement). Where instalments apply, the Demand Notice will set out the amount due in each instalment and the date it must be paid by.
CIL Payment By Instalments:
Some authorities allow for payments to be made in instalments. This is different to ‘phasing’ where payments are triggered by phase – see below.
Check the policy of your local authority.
CIL Phasing
The CIL Regulations allow in the case of a grant of a phased planning permission, that each phase of the development is a separate chargeable development.
A phased planning permission for the purposes of CIL is a planning permission “which expressly provides for the development to be carried out in phases”.
This means that the planning permission must expressly authorise the development to be carried out in phases. It is not enough that it is implicit.
It will usually be important to ensure that the wording includes an express authorisation for a phased development.
Be careful to ensure that the phases coincide with the works to be carried out as phasing will not have the desired effect if some of the works will cause the CIL liability to be triggered not just for the first phase of the development but for some other or all phases for example. This can occur if infrastructure works extend beyond a particular phase.
Step 7 – Pay the CIL Invoice
Step 8 – Council Remove CIL from Land Charges Register
Once the CIL payment has been made, providing there are no relief and clawback periods, the CIL charge will be removed from the Land Charges Register.
However, if relief has been granted, the CIL charge will remain on the Land Charges Register for either three or seven years, depending on which exemption or relief has been granted. This is in case a disqualifying event occurs, as you will then have more CIL to pay.
If no disqualifying event occurs, the CIL charge will be removed when the time period lapses.
If a planning permission or development is not implemented, and the proposal is not commenced, the CIL charge will be removed from the Land Charges Register upon expiry of the planning permission.
Remember – If your development is liable for CIL, you will need to send the Charging Authority specific forms and notices, at specific times. Failure to do this could result in penalties and surcharges (up to £2,500), as well as loss of any rights to claim payment instalments or reliefs/exemptions.
The Charging Authority can take enforcement action to collect outstanding CIL charges. In the most severe cases, this could include putting a halt on development or taking court action.
Please seek your own advice from your LPA, a planning consultant or other qualified professional if you are in any doubt about how CIL operates or how it affects your own position.
Further guidance can be found on your local authority website or by referring to the CIL Regulations 2010 (as amended).
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