FAQ on CIL

 

 

A handy CIL FAQ. CIL is a potentially very expensive charge that can make or break a development. If your local authority has introduced it, then you must account for the costs before agreeing to purchase the land or property. Here at Planning Geek, we aim to remove some of the confusion surrounding CIL by answering many of the most common questions or in other words a CIL FAQ.  

 

1. What is the Community Infrastructure Levy (CIL)

The Community Infrastructure Levy is a levy which some local authorities will charge on developments. The money raised will go towards the costs of infrastructure projects within the local authorities such as schools, transport improvements and GP Practices. The levy was introduced by the Government through the Planning Act 2008 and the CIL Regulations 2010 (which have been amended regularly) with the latest update in March 2021. It is a development contribution and applies to most new development, including individual building projects. It is a legally enforceable levy which is shown as a land charge on the local land charges register. Please refer to this page on the Government website which may supersede any information on this page. 

 

2. Does my local authority have CIL?

That is an impossible question to answer without knowing where your development is and it is probably our most common FAQ! But it is probably the most critical question. The good news is that it is not in Scotland or Northern Ireland. Only a small number of areas in Wales has it. In England around a third of the country is yet to implement it. Until we can get a comprehensive list of all local authorities please do a quick search on <your council> CIL. They might also have a similar FAQ based on their area.

 

3. Which developments are liable for CIL?

Development will potentially be liable for CIL if it:

• Is for a building into which people normally go; and
• Involves new build of at least 100m² gross internal area (GIA) floorspace; or
• Involves new build of less than 100m² GIA floorspace and the creation of one or more dwellings.

 

4. Are there any reasons why a development might not be liable for CIL?

• Involves only change of use, conversion or subdivision of, or creation of mezzanine floors within a building which has been in lawful continuous use for at least 6 months in the 36 months prior to the development being permitted and does not create any new build floorspace; or
• Is for a building into which people do not normally go, or go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery (needs to be entire building and not parts); or
• Is for a structure which is not a building, such as pylons or wind turbines; or
• Is for a use which benefits from a zero or nil charge (£0/m²) as set out in a CIL Charging Schedule;
• Development of less than 100m² of new build floorspace, provided that it does not result in the creation of a new dwelling;
• Charity developments and a claim for charitable relief is made and accepted before development commences;
• Social Housing developments and a claim for social housing relief is made;
• Self build houses, if occupied by the self-builder for three years (must claim relief before development & be able to prove occupation throughout);
• Self build residential annex or extensions if main residence and over 100 m² (must claim relief before development);
• Is for a use or area which benefits from zero or nil charge set out in the CIL Charging schedule;
• Where a single dwelling house is divided into two or more dwelling houses under section 6(1)(d);
• The development is a residential annex or extension wholly within the curtilage of the main dwelling (subject to a clawback period of 3 years).

The CIL form is still required to be completed (in most cases) even if you think you are exempt for any reason. If you fail to submit the form you will need to pay the CIL as if it was not exempt. Please do not ignore it. This is another very common FAQ I’m afraid. 

Don’t forget to deduct any floor space from the existing building. For example an upwards development, will probably replace the loft space space. if you do not claim the existing loft space, you will pay for each new floor added above.

 

6. Is CIL payable on affordable homes?

No, CIL is not chargeable on affordable homes or social housing developments where a claim for relief has been submitted. 

Two forms of relief apply to affordable housing:

• Mandatory Social Housing Relief currently applies to Shared Ownership, Social Rented, First Homes and Affordable Rented Housing. The first and subsequent sales of the property must be for no more than 70% of its market value and a planning obligation has been entered into prior to the first sale of the dwelling designed to ensure that any subsequent sale of the dwelling is for no more than 70% of its market value
• Discretionary Social Housing Relief applies to Discounted Market Housing, but only if it is has been expressly adopted by the charging authority

 

7. Is CIL payable on First Homes?

No, CIL is not chargeable on First Homes where a claim for relief has been submitted. 

Mandatory Social Housing Relief that currently applies to Shared Ownership, Social Rented, First Homes and Affordable Rented Housing. The first and subsequent sales of the property must be for no more than 70% of its market value and a planning obligation has been entered into prior to the first sale of the dwelling designed to ensure that any subsequent sale of the dwelling is for no more than 70% of its market value

Therefore relief will be available for First Homes.

8. Can I claim relief from CIL?

Depending on the circumstances, the following forms of relief may be available:

• mandatory charitable relief
• discretionary charitable relief
• mandatory social housing relief
• discretionary social housing relief
• exceptional circumstances relief.

Claims for charitable relief or social housing relief should be submitted on Form 10: Charitable and/or Social Housing Relief Claim.

Claims for exceptional circumstances relief should be submitted on Form 11: Exceptional Circumstances Relief Claim.

Where a development originally receiving charitable or social housing relief from CIL has, or is intended to be, altered in a way which changes the extent of the relief previously granted, then a further exemption claim must be made on Form 12: Further Charitable and/or Social Housing Relief Claim.

 

10. Outline planning granted before CIL is adopted? 

If outline permission is granted before a CIL charging schedule is adopted but the details don’t come until after the charging schedule is adopted, can CIL be collected following granting consent on the details?

No, CIL cannot be collected on ‘reserved matters’ planning permissions if they have been granted outline planning permission prior to CIL coming into force locally.

 

11. Is CIL payable on parts of a building that people do not normally go in?

Yes, it is on for example a Plant Room. These areas should not be excluded from the calculation of a building’s floor space. Exemption only applies if the whole building is one that people do not normally go in to. You would pay for say loft space or space under the eaves if the floors below were residential.

 

12. Will a residential annex in my garden be liable for CIL?

Not if the property is at your main residence, however please note that your residential annex will become liable if within three years the annex is used for any purpose other than as an annex or the annex is let or either the main residence or annex is sold separately from the other.

 

13. Are roof terraces or balconies subject to CIL?

No. External balconies and roof terraces will not be liable for CIL

 

14. Are car parks subject to CIL?

Yes, they will be if underground or enclosed. If they are open then no, car parks would not be liable to CIL.

 

15. Will a change of use from commercial to residential or office to resi be CIL liable?

Yes. Permitted development is subject to the Community Infrastructure Levy like any other development. Changes of use to residential are also not exempt from the CIL but an offset is currently allowed for existing floorspace that has been occupied in lawful continuous use for at least 6 of the last 36 months. Some local authorities also have a zero rate for residential. If in doubt ask especially if your office block has been empty for a while.

 

16. Where buildings are redeveloped will their floorspace be deducted from the final floorspace for CIL?

Where buildings are demolished to make way for new buildings, the charge will be based on the floorspace of new buildings less the floorspace of the demolished buildings (provided the buildings were in lawful use prior to demolition). Therefore, if more floorspace, which was in a lawful use prior to the development, is demolished than erected in the new development no CIL would be liable. Where part of an existing building has been in lawful use for a continuous period of six months within the past three years, parts of that building that are to be demolished or retained can be taken into account. The way those parts are taken into account is set out in the formula in regulation 40(7) (as amended by the 2014 Regulations).

 

17. If I convert a detached dwelling into two semi-detached dwellings or a house into two flats will I pay CIL?

Residential sub-divisions are not liable for CIL, however if a change of use, additional floor space (over 100 m² or more) are proposed then CIL would be liable. It must however have been in a continuous lawful use for six months out of the last three years.

 

18. How long does a building have to be vacant before the floorspace can no longer be offset against CIL?

Floorspace subject to demolition or resulting from change of use can only be deducted where it has been in continuous lawful use for at least six months in the three years prior to the development being permitted.

 

19. What if only a small part of a building to be demolished has been in use over the last 6 months?

If part of the building is in use for a continuous period of at least six months within the period of three years ending on the day planning permission first permits the development. Therefore, all the floorspace in the building would be deductible from the floorspace of the new buildings. The legal definition of building and planning unit will be important. This is defined in Regulation 40(11) of the CIL Regulations 2010 (as amended).

 

20. I want to convert my barn which is not in residential use at the moment into a dwelling, will I have to pay CIL?

A change of use for the barn to residential would not be liable for CIL as long as the barn is in lawful use (under the six in 36 rule) and therefore you would not be liable for CIL.

 

21. Is CIL liable on a listed building or within the curtilage of one?

Yes CIL is liable unless it qualifies under one of the other exemptions on this page

 

22. When is a liability notice issued?

A liability notice is issued as soon as practical after planning permission is granted. In the event of an outline planning application, this will be once all reserved matters have been dealt with. If there are changes to the planning permission, such as increased floor space, then a revised liability notice will be issued. A new liability notice will be issued if any surcharges are due (see below for those). If neither increased floor space or surcharges (see below) then the charge will remain constant. 

 

23. When is a demand notice issued?

A demand notice is issued on receipt by the local authority of a commencement notice or a notice of chargeable development. In other words once the planning permission is made extant and started. 

 

24. When is CIL payment due?

CIL will be payable within 60 days of development commencing, or if the local authority has an instalment policy, then in accordance with that policy. 

However: 

• Where no-one has assumed liability but a commencement notice has been received, payment is due immediately upon commencement
• Where the Council has determined a ‘deemed commencement’ date (because no valid Commencement Notice was provided), payment is due on the deemed commencement date
• There are also special provisions under Regulation 71 where the Council has to transfer liability to the land owners or where charitable or social housing relief has been granted and a ‘disqualifying event’ has taken place. These will be unusual events

 

25. What classes as commencement? 

Development is commenced when material operations are begun. These are defined within Regulation 56 of the Town and Country Planning Act 1990. Operations include any construction work, demolition, digging of a trench for foundations, laying of underground pipes or mains to the foundations, layout or construction of roads or any change of use in the land. Development is also begun when a new use is implemented. 

 

26. Who is liable to pay the levy?

The responsibility to pay the levy rests with the ownership of land on which the liable development will be situated. Although liability rests with the landowner, the regulations recognise that others involved in a development may wish to pay. To allow this, anyone can come forward and assume liability for the development.

 

27. How is the levy paid?

The charge is levied in £ / m² on the net additional increase in floorspace. It will normally be collected as a monetary payment, although there is also provision for it to be paid by transfer of land to the local authority if certain criteria are met.

 

28. Is VAT applied to CIL charges?

The charge levied in £ / m2 on the net additional increase in floorspace for the CIL is exempt from VAT.

 

29. How will proposed levy rates respond to factors such as inflation?

In calculating individual charges for the levy, charging authorities will be required to apply an annually updated index of inflation to keep the levy responsive to market conditions. Therefore the actual CIL rate might be considerably higher than the published rate.

 

30. What is the CIL annual indexation notice?

All CIL Liability Notices issued will include indexation in the calculation of the chargeable amount. The calculation of CIL chargeable amount is defined by the CIL Regulations 2010 (as amended). CIL is calculated by multiplying the net increase in gross internal floor area (sqm) by the relevant CIL rate (£/sqm), plus any indexing for inflation/deflation (between the year in which planning permission was granted and the year in which the charging schedule took effect).

          R x A x I^P
                I^c

Where:

• R is the CIL rate in £/sqm
• A is the net increase in gross internal floor area (sqm)
• I^P is the All-in Price Index for the year in which planning permission was granted
• I^c is the All-in Price Index for the year in which te charging schedule started operation

For permissions granted before 1 January 2020 the rates published by the BCIS All-In Tender Price Index apply. For permissions granted on or after 1 January 2020 the Royal Institute of Chartered Surveyors CIL index will apply.

 

31. How is the levy collected?

The levy’s charges become due from the date of commencement of a chargeable development. When planning permission is granted, the local authority will issue a liability notice setting out the amount of the levy and the payment procedure. Unlike contributions collected through S106 agreements there is no time constraint for the spending of monies collected through CIL.

 

32. Can CIL be paid in instalments?

Usually each local authority will have a scheme to pay the levy in instalments. Often a portion prior at the start, then further payments after a set number of days. Check with your local authority for their scheme.

 

33. Can I transfer my CIL liability?

Prior to commencement of development an assumption of liability can be withdrawn or transferred at any time by using the relevant form below.

Once development commences, the assumption of liability can only be transferred and cannot be withdrawn. Once commencement occurs, CIL liability can be transferred any time up to the date the final payment is due.

If a landowner who has assumed liability to pay CIL subsequently wishes to withdraw or transfer their liability to someone else, due to selling the site for example, then the landowner will be responsible for completing the appropriate form and returning it to your local authority. The forms are available below.

• View and download (Form 3) Withdrawal of Liability form
• View and download (Form 4) Transfer of Liability form

If you fail to notify your local authority of a transfer or withdrawal of liability, then may be liable to a surcharge.

 

34. Are there any surcharges and late interest?

Surcharges and interest may be imposed as follows: 

• If the development has commenced and no Commencement Notice has been received – £50 on each liable person (regulation 80)
• Where the Council has to apportion liability between different owners – £500 on each owner (regulation 81)
• For failure to submit a Notice of Chargeable Development – 20% of the chargeable amount up to a maximum of £2,500 (regulation 82)
• For failure to submit a Commencement Notice – 20% of the chargeable amount up to a maximum of £2,500 (regulation 83)
• For failure to notify the Council of a disqualifying event within 14 days – 20% of the chargeable amount up to a maximum of £2,500 (regulation 84)
• For late payment – 5% of the chargeable amount or £200 (whichever is greater) may be imposed after 30 days and again after 6 months and then after 12 months on any outstanding amount (regulation 85)
• Failure to comply with an information notice within 14 days – 20% of the chargeable amount up to a maximum of £1,000 (regulation 86)
• Late payment interest must be paid starting on the day payment was due at a rate 2.5 percentage points above the Bank of England base rate (regulation 87)

 

Any other FAQ?

If you have any other FAQ over and above these 34, please feel free to get in touch and we will do our best.

 

Page Updated: 10th October 2024