What is the Community Infrastructure Levy (CIL)?
The Community Infrastructure Levy is a planning charge, introduced by the Government through the Planning Act 2008 to provide a fair and transparent means for ensuring that development contributes to the cost of the infrastructure it will rely upon, such as schools and roads. The levy applies to most new buildings and charges are based on the size and type of new floorspace.
What are the benefits of the Community Infrastructure Levy?
The Government has decided that a tariff-based approach provides the best framework to fund new infrastructure. CIL is considered to be fairer, faster and more certain and transparent than the current system of planning obligations which are generally negotiated on a ‘case-by case’ basis. Levy rates that will be set in consultation with local communities and developers and will provide much more certainty ‘up front’ about how much money developers will be expected to contribute.
Why should development pay for infrastructure?
Almost all development has some impact on the need for infrastructure, services and amenities so it is only fair that such development pays a share of the cost.
What is infrastructure?
Infrastructure which can be funded by the levy includes schools, transport, flood defences, hospitals, community facilities and other health and social care facilities. This definition allows the levy to be used to fund a very broad range of facilities such as play areas, parks and cultural and sports facilities and gives communities flexibility to choose what infrastructure they need.
The Levy can be spent on 'the provision, improvement, replacement, operation or maintenance of infrastructure'. It can be used to increase the capacity of existing infrastructure or to repair failing infrastructure if that is necessary to support development. CIL cannot be used to fund solutions to existing problems i.e. traffic calming/management or on repairs to existing infrastructure in an area that hasn’t experienced housing growth.
What is the relationship between CIL and planning obligations?
Planning obligations (funding agreements between the local planning authority and the developer) will continue to play an important role in helping to make individual developments acceptable. However, reforms have been introduced to restrict the use of planning obligations.
The CIL levy is intended to provide infrastructure to support the development of an area rather than to make individual planning applications acceptable in planning terms. As a result, there may still be some site specific impact mitigation requirements without which a development should not be granted planning permission (e.g. affordable housing, local highway and junction improvements and public open space). Therefore, there is still a legitimate role for development planning obligations to enable a local planning authority to be confident that the specific consequences of development can be mitigated.
Unlike contributions collected through S106 agreements there is no time constraint for the spending of monies collected through CIL.
What development is liable for CIL?
Development will be liable for CIL if it:
- Involves new build of at least 100m2 gross internal area (GIA) floorspace; or
- Involves the creation of one or more dwellings.
This includes development permitted by a ‘general consent’ (including permitted development).
Development will not be liable for CIL if it:
- Involves only change of use, conversion or subdivision of, or creation of mezzanine floors within a building which has been in lawful use for at least six months in the three years 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; or
- Is for a structure which is not a building, such as pylons or wind turbines; or
- Is permitted by a ‘general consent’ (including permitted development); or
- Is for a use which benefits from a zero or nil charge (£0/m2) as set out in a CIL Charging Schedule.
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.
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.
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.
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 Council will issue a liability notice setting out the amount of the levy and the payment procedure. Once a Commencement Notice has been received, the Council will issue a Demand Notice. This will detail who is liable for payment, confirm the amount payable as well as any reliefs or surcharges and it will also specify the dates and instalment amounts (if East Cambs' Instalment Policy has been triggered) on which payments are due. Where the Instalment Policy does not apply, the chargeable amount must be paid in full within 60 days of the notified or deemed commencement date of the chargeable development.
Can CIL be paid in instalments?
Yes, please read East Cambridgeshire District Council's Instalment Policy.
How will payment of the levy be enforced?
The levy’s charges are intended to be easily understood and easy to comply with. Most of those liable to pay the levy are expected to pay their liabilities without problem or delay. However, where there are problems in collecting the levy charging authorities will have the means to penalise late payment. In cases of persistent noncompliance the regulations also enable collecting authorities to consider more direct action such as the issuing of a CIL Stop Notice or applying to the courts for seizure of assets to pay the outstanding monies or for custodial sentences.
I will be submitting a planning application. How can I find out more about CIL and what I need to do for my planning application submission?
The District Council has prepared some detailed guidance notes for applicants to help guide them through submission of planning applications and the related CIL documentation and these are available on the following link (Detailed Guidance for Applicants). The process relating to CIL is strictly prescribed by the CIL regulations, with penalties if the process is not correctly followed. Applicants are strongly advised to read this guidance and seek further advice from the District Council or other sources if they are unclear on any aspect.
Are there any reliefs from the CIL?
In accordance with the Regulations the following development may receive relief from CIL:
- Charitable development;
- Social housing development;
- Self-build development;
- Self-build residential annex or extension.
Guidance notes are available to explain the process for claiming relief, available to be viewed on Guidance Notes and Other Information Source.
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.
How will the levy be spent?
Charging authorities are required to spend the levy’s revenue on what they see as the infrastructure needed to support the development of their area. The assessment of ‘need’ will largely be informed by the Infrastructure Delivery Plans (IDPs) published by each authority alongside their Local Plans. The levy is intended to focus on the provision of new or improved infrastructure and should not be used to remedy pre-existing deficiencies unless those deficiencies will be made more severe by new development.
East Cambridgeshire District Council (ECDC) is obligated, under the CIL Regulations 2010 (as amended), to produce a CIL Infrastructure list. This list sets out the infrastructure projects that could benefit from CIL funding. The distribution of CIL funding is a matter for the Council to decide, but the Regulations only permit expenditure of CIL funds on infrastructure projects that are included on the CIL Infrastructure List.
A project being included on the List does not signify a guarantee of CIL funding. Whether a project receives CIL funding will depend on the Council’s priorities at the time of the application for funding being made, and the amount of CIL funding available. The District Council will ensure timely release of funds when invoices are received for satisfactorily completed works.
How will local neighbourhoods benefit from CIL?
Charging authorities must allocate a ‘meaningful proportion’ of levy revenues raised in each neighbourhood back to that neighbourhood. This will ensure that where a neighbourhood experiences a new development, it receives sufficient money to help it manage the resulting impacts on the locality. Currently the percentage is set at 15% or, in areas where there is a neighbourhood development plan, the amount passed to the parish or town council is 25%.
Is there a mechanism for the CIL to be spent outside of the charging authority?
Charging authorities may pass money to bodies outside their area to deliver infrastructure which will benefit the development of their area, such as the Environment Agency for flood defence or, in two tier areas such as Cambridgeshire, the County Council, for education and transport infrastructure. Charging authorities will also be able to collaborate and pool their revenue from their respective levies to support the delivery of ‘sub-regional infrastructure’.
How will CIL be monitored?
To ensure that the levy is open and transparent, charging authorities must prepare short reports on the levy for the previous financial year which must be placed on their websites by 31st December each year. These reports will set out how much revenue from the levy has been received, what it has been spent on and how much is left, to see the latest reports please go to Delivery of Projects, reports and Policies.