If you are buying or selling development land, you may have come across the Community Infrastructure Levy’s (CIL) and have questions such as:
- What is a CIL charge on a property?
- How is CIL calculated?
- Do I have to pay CIL on commercial property?
- When does CIL become payable?
- Can CIL charges be reduced or avoided?
In this article, Commercial Property Solicitor and CIL specialist, Patsy Whitford, explains everything you need to know about Community Infrastructure Levy's…
What is a CIL charge on a property?
The Community Infrastructure Levy (CIL) is a planning charge set by the relevant local authority. It helps pay for additional services needed when new developments are built.
For example, if a development includes 170 new homes, the area may need new bus services, school places and roads. The local authority must provide these services, but does not receive money from the sale of the development site. CIL helps fund these additional services.
How is CIL calculated?
CIL is calculated using a fixed formula set by the local authority in their charging schedule. This means:
- The amount is non-negotiable
- Developers can plan ahead and budget accurately
However, it may be possible to agree on phased payments, so the charge is paid over time rather than all at once.
Please bear in mind that as the CIL liability arises on the grant of planning permission but may not be payable until months or years later, there will be interest charged on the CIL liability, so factor this into your development costings.
Who pays CIL?
CIL is linked to the development itself, not the person.
If ownership of a site changes, the owner must complete an assumption of liability form. This tells the local authority who is responsible for paying.
Do you pay CIL on commercial property?
Yes, you may have to pay CIL on commercial property.
CIL is not limited to residential property and can be charged on commercial units. Each local authority sets out its charges in a charging schedule, which explains how much is charged in each type of development.
What are the changes to CIL regulations?
The recent changes to CIL include:
- Greater consideration of the location and type of development
- Additional relief, such as vacant building credit
- Increased use of phased payments
- Higher penalties for late payment or non-compliance
- A move to a more digital CIL process, making accurate documentation essential
CIL rates are also often adjusted, so check the latest changes and consider future changes.
There is talk of merging CIL and s106 obligations in the future, but this has not yet occurred.
When do you have to pay CIL?
CIL liability starts when planning permission is granted.
However, payment is usually at a set later date, for example:
- When development commences
- At agreed stages
The local planning authority will issue a payment demand, often including an interest payment.
If you are not the original developer, you will need to submit an assumption of liability notice to the local planning authority, so they know who to issue the demand to.
How do you know if CIL applies?
To check if CIL applies:
- Review the planning decision notice
- Check the planning portal
It is important to clearly agree who is liable for CIL payment, in the contract, on the sale or purchase of development land. We recommend that you seek tailored legal advice.
You can get in touch with one of our Commercial Property Experts by calling 01202 499255.
How to avoid paying CIL
This is about minimising the CIL liability payable, so consider any reliefs that the development may benefit from or agree on a phased payment plan, to ensure that you are not paying the full CIL liability up front, but at a time that is more financially beneficial to you.
Each planning authority has different CIL rates and may have different reliefs or discounts so check the relevant authorities charging schedule.
Who is exempt from paying CIL?
Certain types of development or developers are either fully or partially exempt from paying CIL, including:
- Charitable use,
- Social/affordable housing,
- Vacant building relief,
- Self-build developments
Small developments under 100 m² of gross internal floor space may also qualify for exemption, depending on the local authority.
What happens if you don't pay CIL?
There are severe penalties if you don’t pay the CIL liability, which include:
- Interest,
- Other charges,
- Even enforcement action, such as land charges or court proceedings.
CIL and s106 agreements?
Developments are often subject to both CIL liability and s106 payment. The main difference between these payments is that CIL is a set calculation and s106 payments are more negotiable based on each specific development site.
These payments can sometimes cover the same or very similar types of infrastructure, so it is important to check that there is no inadvertent double-charging.
CIL is a vital part of the planning process and should always be considered on any development project to ensure the liability is proportionate and any reliefs can be considered.
Specialist Commercial Property Solicitors
If, after reading this article, you have any questions about the Community Infrastructure Levy’s or Section 106 obligations, you can get in touch with a member of our expert Commercial Property Team by calling 01202 499255.
We offer all new clients a free initial chat, you can find out more and book yours through the form at the top of the page.
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