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Last edited 24 Sep 2020
Community infrastructure levy CIL
Section 206 of the Planning Act 2008 gives ‘charging authorities’ (generally the local planning authority) the power to charge the community infrastructure levy (CIL). It is a charge that local authorities can choose to impose on new developments to fund local infrastructure. This could include infrastructure such as:
Charging authorities must:
- Prepare and publish a document known as the 'charging schedule' which will set out the rates of CIL which will apply in the authority’s area.
- Apply the levy revenue it receives to funding the provision, improvement, replacement, operation or maintenance of infrastructure to support the development of its area, and;
- Report to the local community on the amount of levy revenue collected, spent and retained each year.
The levy is charged by square metre of floor space of a development. It can be charged on any new dwelling or any other development that has 100 sq. m or more gross internal floor space. The floor space of existing buildings that are going to be demolished can be deducted, as can the development of the interior of existing buildings. Charities and social housing schemes may be exempt from the levy. Once planning permission is granted, collecting authorities will issue applicants with a levy liability notice which becomes due when development commences.
NB: Since 24 February 2014, homes that are owner-occupied and built or commissioned by individuals, families or groups of individuals for their own use are exempt from the levy (Ref. Gov.uk Levy cuts to help hard-working people build their own home).
 Relationship between the levy and planning obligations
Planning obligations (also known as Section 106 Agreements) are obligations attached to land that is the subject of a planning permission. Planning obligations are used to mitigate or compensate for the negative impacts of a development or to prescribe the nature of a development. They are intended to make acceptable developments which would otherwise be unacceptable.
In 2010, measures within the Community Infrastructure Levy Regulations came into force clarifying the relationship between planning obligations and the community infrastructure levy and restricting the use of planning obligations.
Planning obligations must meet three new statutory tests from 6 April 2010:
- They must be necessary to make the development acceptable.
- They must be directly related to the development.
- They must be in scale to the development.
In December 2012, CLG published Community Infrastructure Levy guidance. Paragraphs 84 – 91 set out in detail the relationship between the levy and planning obligations. They suggest that when the levy is introduced, charging authorities should scale back Section 106 requirements ‘to those matters that are directly related to a specific site, and are not set out in a regulation 123 list'. A regulation 123 list sets out those projects or types of infrastructure that a charging authority intends to fund through they levy.
The guidance is intended to ensure that there is transparency about what the charging authority intends to fund through the levy and where Section 106 contributions may continue to be sought. This should ensure that there is no ‘double dipping’, where developers are asked to pay twice for infrastructure. Once an authority has introduced the levy in its local area, it must not use obligations to pay for infrastructure they intend to fund via the levy.
Planning obligations will no longer be the basis for a tariff. Once an authority introduces the levy in their area, it can no longer pool more than five contributions for infrastructure capable of being funded by the levy.
NB: The Community Infrastructure Levy (Amendment) Regulations have now been amended several times, and further changes and clarifications are expected. See reform below.
NB: On 28 November 2014, Eric Pickles MP, Secretary of State for Communities and Local Government announced plans to make clear that Section 106 agreements should generally not be sought from the smallest housebuilders on sites of 10 homes or fewer, including self-build, extensions and annexes. In very rural areas, sites of 5 homes or fewer should not face the charge.
The National Planning Policy Framework states that when local authorities are deciding whether to impose planning conditions, they should consider the combined effect that those conditions and the levy will have on the proposed development.
In January 2013, planning minister Nick Boles announced that where there is a neighbourhood plan in place that has been accepted in a referendum, communities (such as town or parish councils) will be given 25% of the levy when planning permission for a development is approved. This money will be available to spend on infrastructure from an approved list, including improvements such as ‘..to re-roof a village hall, refurbish a municipal pool or take over a community pub’.
The funding will be passed to the community group in accordance with a timetable agreed with the local planning authority. The community group will be expected to work with the local planning authority in deciding how it should be spent. Where there is no town or parish council, the local planning authority will retain the funds and spend them ‘…in accordance with the wishes of the community’.
Amended regulations came into force on 25 April 2013. These enabled a proportion of the Community Infrastructure Levy to pass to parish councils and provided for Mayoral Development Corporations to become, and cease being the charging authority.
In addition, the Community Infrastructure Levy (Amendment) Regulations 2014 came into force on the 24th February 2014, introducing a number of changes:
- Delaying limitations to the pooling of section 106 agreements until April 2015.
- Creating an exemption for self-builders and residential annexes and extensions.
- Allowing local authorities to set differential rates according to the size of developments.
- Allowing local authorities to accept ‘payments in kind’ through the provision of on-site or off-site infrastructure.
- Changing the ‘vacancy test'.
- Creating a requirement to strike an appropriate balance between the need to fund infrastructure from the levy and the economic viability of developments.
From 6 April 2015, local authorities can no longer pool more than five section 106 obligation contributions to pay for a single infrastructure project or type of infrastructure if it is a type of infrastructure that is capable of being funded by the community infrastructure levy. Provisions that are not capable of being funded by the levy, such as affordable housing, are not restricted.
In December 2018, the government opened a consultation on changes to developer contribution rules intended to speed up housing delivery. The government response to the consultation can be seen at: https://www.gov.uk/government/consultations/developer-contributions-reform-technical-consultation
In June 2019, reforms were introduced requiring that councils report the deals done with developers, and how that money will be spent. Minister of State for Housing Kit Malthouse said: "Communities deserve to know whether their council is fighting their corner with developers – getting more cash to local services so they can cope with the new homes built." In addition restrictions were eased to allow councils to fund single, larger infrastructure projects with contributions from multiple developments.
In October 2018, the Association for Consultancy and Engineering (ACE) called for further reform, reporting that 39% of the levy charged on developers for local infrastructure improvements remained unspent. Ref https://www.acenet.co.uk/news/ace-news/download-our-scrapping-the-levy-report/
On 1 September 2019, new rules came into force requiring that councils publish details of deals done with housing developers so that residents can see exactly how money will be spent in their community. In addition, new planning practice guidance was published in order to further simplify advice on the CIL regime. Ref https://www.gov.uk/government/news/communities-to-see-how-housing-developers-cash-benefits-them-thanks-to-new-planning-rules
On 6 August 2020, the government published a white paper, Planning for the future, proposing that the system of charging a Community Infrastructure Levy on developments and imposing planning obligations (Section 106 agreements) should be reformed, to create a nationally set, value-based flat rate charge referred to as the ‘Infrastructure Levy’. For more information see: Infrastructure levy.
 Assessments of performance
In July 2014, Savills published a report 'CIL, The Countdown to April 2015' suggesting that the levy will not be in place in two thirds of local authorities when the rules on the pooling of section 106 agreements come into effect.
In October 2014, Savills published a report 'CIL, is it delivering' which found that, 'Charging authorities have seen a 49% fall in the number of new residential planning consents granted in the 12 months following the implementation of CIL. This is in contrast to an increase of 32% across the whole of England, over the equivalent time period.'
The aims of the review, to be chaired by Liz Peace, are:
- To assess CIL’s performance in providing a faster, fairer, more certain and transparent means of funding infrastructure through developer contributions.
- To examine the relationship between CIL and Section 106 agreements.
- To consider the impact of CIL’s neighbourhood element of helping increase community support for development.
- To consider the operation of reliefs and exemptions.
 Related articles on Designing Buildings Wiki
- Affordable housing.
- The Community Infrastructure Levy (Amendment) Regulations 2014.
- Community infrastructure levy commencement notice.
- Developer contributions.
- How good infrastructure can create a sense of place.
- Infrastructure contracts: tailor-made or off-the-shelf?
- Localism act.
- National Planning Policy Framework.
- Neighbourhood planning.
- Planning Act 2008.
- Planning permission.
- Planning conditions.
- Planning obligations.
- Review announced of the Community Infrastructure Levy.
- Section 106 agreement.
- Section 106 exemption.
- Strategic infrastructure tariff.
- Viability test.
- What approvals are needed before construction begins.
- Gov.uk Levy cuts to help hard-working people build their own home. 24 February 2014.
- Community infrastructure levy regulations in full.
- Department for Communities and Local Government (CLG): Community Infrastructure Levy guidance 14 December 2012.
- CLG: Communities to receive cash boost for choosing development. January 2013.
- The Planning Act 2008
- The Community Infrastructure Levy (Amendment) Regulations 2013.
- The Community Infrastructure Levy Regulations (2010)
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