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Community Infrastructure Levy (CIL)
CIL is a charge on new buildings above a certain size. It was designed to help fund local and sub-regional infrastructure and came into force on 6 April 2010. Although it has been around for a while, until recently very few local authorities had chosen to implement the levy. However, regulations which simplified CIL came into force on 6 April 2011. Since then implementation by local authorities has increased and developers will come across CIL more and more.
CIL can only be implemented if the local authority has an up-to-date development plan in place. There is no liability for CIL unless there is a charging schedule in effect on the day planning permission for the liable development is granted.
CIL is based on a formula that relates the size and character of the development to the amount charged. Rates are expressed as pounds per square metre and will be levied on the net internal area of development. The amount chargeable is calculated at the time planning permission is granted by:
multiplying the chargeable net floor area by the relevant CIL rate set out in the charging schedule, plus any indexing for inflation.
Any existing floor space that will be demolished before completion of the development, and is in lawful use when planning permission is granted, will be taken into account when calculating CIL to reduce liability.
CIL will not be charged if there is no extension of floor space as a result of the development, nor will it be charged on structures or buildings which people only enter for the purpose of inspecting or maintaining fixed plant or machinery. Most developments under 100 square metres will not pay the levy e.g. a small extension to a house. But development that involves the creation of a new residential unit, such as a house or flat, will pay the charge even if the unit is below 100 square metres in area.
The definition of development for the purposes of CIL is very wide and includes:
- Anything done by way of, or for the purpose of, the creation of a new building
- Anything done to, or in respect of, an existing building
The liability to pay CIL arises on the commencement of a CIL liable development. Collecting authorities must be notified of the anticipated date of commencement by a commencement notice. The collecting authority must then serve a demand notice on each person liable to pay CIL. A person liable to pay is someone who ‘assumes liability’ to pay CIL. Liability is assumed by submitting an assumption of liability notice to the collecting authority.
If no one assumes liability then the charge is immediately payable by the land owner as soon as development work starts. Assumed liability can be withdrawn at any time before development or transferred to another person after development commences, but before the 60 day payment window has expired.
There are three main types of relief from the levy:
- Charitable relief – for example, if a charity owns the land or if the development is for charitable purposes
- Social housing relief
- Exceptional circumstances – for example, where the levy would have an unacceptable impact on the economic viability of the development
For more information or to find out how we can help, contact a member of our Commercial Property team.