What is a Community Infrastructure Levy and Why is It Important to Comply with Procedure?

Karne Jones and Tatiana Zanré, in our Planning & Environmental Law team, discuss Community Infrastructure Levies and the importance of compliance. 

What is a Community Infrastructure Levy?

A Community Infrastructure Levy (‘CIL’) is a levy charged on new buildings, where the development creates a net additional floor space of 100sqm or more, or where it creates a new dwelling or a flat. CIL is typically paid by developers or owners of the land in question.

The governing legislation for CIL is The Community Infrastructure Levy Regulations 2010 (as amended) (‘the CIL Regulations 2010’). It is important to note that CIL only applies in areas where the charging authority has consulted on and approved a charging schedule setting out the levy rates. There is no liability for CIL unless there is a charging schedule in effect on the day planning permission is granted for CIL liable development. This is usually published on the charging authority website. Charging authority are the same authorities that prepare the development plans and includes District and unitary authorities, London boroughs, National Park Authorities, The Broads Authorities and The Mayor of London.

It is important that professional advice is taken in advance to ensure the appropriate forms are completed correctly and in a timely manner to avoid triggering CIL liability by default.

What is chargeable development?

CIL is not payable in respect of all development, only development defined as “chargeable development”. Regulation 9(1) of the CIL Regulations 2010, states that, “chargeable development is ‘development for which planning permission is granted”.

Any development that is classified as a building is deemed chargeable development for the purposes of CIL, meaning development of roads and railways, by way of example, are not liable. However, it is important to note that buildings associated with the development of the land, such as offices or cafés, may be liable to CIL if they fall within the requirements. Certain types of buildings are excluded i.e. buildings which people don’t normally go into or go into intermittent, for purpose of inspection or maintaining fixed plant or machinery.

Any development which creates either a new dwelling or provides additional new floor space of 100 square meters and over is subject to CIL. Where planning permission is granted for phased development, each phase is treated as a separate chargeable development liable for CIL. This is an important consideration to take into account when considering outline and reserved matter application.   

The collecting authority must issue a CIL Liability Notice, as soon as practicable following grant of planning permission. CIL is calculated on gross internal floor space of the net additional development multiply CIL rate set out in the charging schedule, and add any indexation for inflation. An assumption of liability notice can be submitted by any person who wishes to assume liability for CIL in respect of a chargeable development. This could be the developer who has applied for planning permission, a landowner or another person and there is no requirement for the person who assumes liability to have any interest in the land to which the notice relates. Where the planning permission is phased, different persons can assume liability for different phases.

The landowner or the developer will need to assume liability for CIL before the development is commenced, by submitting an assumption of liability form to the collecting authority who is required to send an acknowledgment of receipt of the assumption of liability notice. Where no one assumes CIL liability, CIL liability is apportioned between the person having material interest in the land at the time development commenced. CIL liability is a land charge that runs with the land.

When does CIL become payable?  

Once the collecting authority issues a CIL Liability Notice, a Commencement Notice must be submitted by the liable party. Commencement Notice must be served on the collecting authority no later than the day before development commences and the collecting authority must acknowledge receipt of the Commencement Notice. 

The collecting authority will determine a deemed commencement date, if it:

• Has not received a Commencement Notice in respect of the development but believes the development has commenced.
• Has received a Commencement Notice, however, believes that development commenced earlier than the date stated as the intended commencement date (Regulation 68 of the CIL Regulations 2010).

CIL becomes payable on commencement of development. Development will be treated as "commencing" on the earliest date on which any ‘material operation’ is carried out on the land. Material operation for CIL purposes is defined by reference to section 56(4) of the Town and Country Planning Act 1990 (as amended). Developers therefore need to be careful, as implementation of a planning permission to keep it alive could trigger CIL.

Following receipt of a Commencement Notice, or a decision by the collecting authority that deemed development has commenced, a collecting authority must serve a Demand Notice on each person liable to pay CIL. The Demand Notice is a reminder to liable parties of how much they owe and by when.

What are the deadlines to appeal to a CIL Liability Notice and the Demand Notice?

There are strict deadlines to appeal the CIL Liability Notice and the Demand Notice, which must be adhered to. If an appeal deadline is missed, the landowner or developer will be liable for the full amount, which will be payable immediately, and if the payment is not made on time late payment interest will start to accrue and the collecting authority will impose surcharges on top of the outstanding amount due.

CIL Liability Notice

If you dispute how the collecting authority has calculated the CIL liability, you can request for a review of the chargeable amount under Regulation 113 within 28 days of the date of the CIL Liability Notice. The collecting authority has 14 days to respond and notify you of its decision. If you are not satisfied with the outcome of the review, or you have not received a response, you have 60 days beginning on the date of the CIL Liability Notice to appeal to the Valuation Office Agency (VOA) on the ground that the revised or original chargeable amount has been calculated incorrectly in accordance with Regulation 114. You cannot appeal to the VOA, if the development has already commenced.

Demand Notice

You can appeal to the Secretary of State against the ‘deemed commencement date’ set out in the Demand Notice under Regulation 118 on the ground that the collecting authority has incorrectly determined that date. The appeal must be made within 28 days beginning on the date of issue of the Demand Notice.

Similarly, you can appeal against the collecting authority’s decision to impose a surcharge in accordance with Regulation 117. The appeal can be made on the following grounds:

• The claimed breach which led to the imposition of the surcharge did not occur.
• The collecting authority did not serve a liability notice in respect of the chargeable development to which the surcharge relates.
• The surcharge has been calculated incorrectly

The appeal must be made within 28 days beginning with the day on which the surcharge was imposed and must be made to the Secretary of State.

What reliefs and exemptions are available?

There are different reliefs and exemptions available. Regulations 41 to 58 of the CIL Regulations 2010 set out the exemptions and reliefs and the procedure for claiming the exemption or relief.

Minor development

One such exemption is ‘minor development’, where a new building or extension to pre-existing buildings creates an additional floorspace of less than 100 square meters. If met, this exemption applies automatically. However, this exemption won’t apply if the ‘development will comprise one or more dwellings’ (Regulation 42(2)).

Residential annexes or residential extension

A person will be exempt from CIL liability if the person owns material interest in the dwelling, occupies the main dwelling as a sole or main residence and the development is a residential annex or an extension. Regulation 42A sets out as follows:

• residential annex – is an annex that is entirely within the curtilage of the main dwelling or compromise one new dwelling
• Residential extension – is an enlargement to the main dwelling and does not comprise a new dwelling.

Self Build exemption

Another exemption available is ‘self-build housing’. Self-build housing is a dwelling built by a person (including where built following a commission by that person) and occupied by that person as a sole or main residence (Regulation 54A(2)).

Unlike ‘minor development’, the ‘self-build development’ exemption is not automatic and must be claimed by an individual who assumes liability to pay the CIL. The claim must be made by the person who intends to build or commission the new building and has assumed liability to pay CIL and the claim. The claim will lapse if the chargeable development has commenced before the collecting authority has notified the claimant of its decision on the claim.

It is important to note that there are individual procedures for claiming the above-mentioned exemptions, dependant on the type of exemption or relief sought. It is therefore important that the correct procedure is followed to ensure that a valid application is made, and the exemptions have been granted before commencing development.

It is important that legal advice is taken in advance to ensure that the correct forms are completed and submitted in a timely manner to avoid triggering default CIL liability and the full payment becoming due immediately.  

There is also exemption and relief for charitable institutions and social housing relief. Finally, there is discretionary relief available for exceptional circumstances and where the collecting authorities consider it is expedient to do so. Exceptional circumstances relief may only be granted if exceptional circumstances relief is available in the charging authority's area, a section 106 agreement has been entered into in respect of the planning permission which permits the development, and the charging authority considers payment of CIL would have an unacceptable impact on the economic viability of the development.

If you have been served a CIL Liability Notice and/or a Demand Notice and would like assistance and advice on how to appeal, whether to appeal, or eligibility for relief or exemption, please get in touch.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.