Five things you need to know about the Community Infrastructure Levy

Posted: 09/10/2012

One - the Community Infrastructure Levy (CIL) does not apply in some circumstances, including:

• no charging schedule: there is no liability for CIL unless, on the day planning permission is granted for a chargeable development, a charging schedule has been adopted (remember that CIL is a discretionary charge). Look on the website of the charging authority for the area where the property is situated, raise enquiries of the local authority and raise enquiries of the other side to ascertain whether a charging schedule has been adopted;
• building is too small: new buildings and enlargements to existing buildings below 100 square metres of gross internal floor space will not be liable for CIL, unless comprising one or more dwellings;
• no extension of floor space: if there is no extension of floor space as a result of the development, CIL will not apply;
• no building: a development that is not a 'building' (eg roads, pipelines and overhead cables) will not be chargeable to CIL;
• exempt buildings: buildings into which people do not normally go or which they only go into intermittently for inspecting and maintaining fixed plant or machinery are exempt (eg electricity sub stations).

Two - CIL is payable on commencement of development under section 56(4) Town and Country Planning Act 1990

Developers need to be careful; implementation of a planning permission to keep it alive could trigger CIL. Also note that under section 73 of the 1990 Act, amendments to existing planning permissions are treated as a new application. Where the planning permission has not been implemented, such amendments could trigger CIL liability if a CIL charging schedule has been adopted. The Government has agreed to close this loophole later this year but until legislation is brought forward, careful consideration needs to be given to amending planning applications in CIL areas.

Three - CIL is calculated by reference to a statutory formula

CIL rates are expressed in the relevant charging schedule as pounds per square metre of development and are levied by applying the formula set out in regulation 40 of the CIL Regulations 2010 (broadly CIL rate x increase in floor area x indexing). Note that when determining whether the development results in an extension of floor space, only existing floor space which is in lawful use when planning permission is granted is deducted (that is floor space that has been in use for a continuous period of at least six months within the period of 12 months ending on the day planning permission first permits development). As it can take time for planning permission to be granted, parties looking to develop need to manage their vacancies carefully.

Four – change of use planning permissions will not normally result in a CIL charge

Whilst the permission is liable for CIL, the charge would normally be nil because there is no extension of floor space. However, as a result of the statutory formula (and its reference to ‘lawful use’), a change of use of a building which has been completely vacant for more than six months will result in a CIL charge.

Five - CIL does not replace planning obligations; the two may exist side by side

Provisions should be included in section 106 agreements so that if CIL becomes payable, the obligations can be revisited to ensure that there is no double recovery.

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