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Legal Updates

Community Infrastructure Levy - An Outline

06 April 2010 #Setting up in the UK

Community Infrastructure Levy (CIL) was introduced in the Planning Act 2008 as a levy on development to provide funding for infrastructure to serve development across the area of the charging authority rather than the infrastructure directly required for that individual development.  It replaces the proposal, at the Bill stage of the Act, to charge a tax on the increase in development value resulting from the grant of planning permission, to be called Planning Gain Supplement.  Liability to CIL will derive from the grant of planning permission. 

The provisions of the 2008 Act relating to CIL are all in force already but much of the detail is to be contained in regulations.  After consultation last year, amended draft CIL Regulations have been published, and these are expected to come into effect on 6 April 2010, but there will still be a great deal of work to be undertaken by the charging authorities before they are able to collect CIL.

CIL is based upon formulae relating to the size and character of the development in question.  Local planning authorities (LPAs) will have a discretionary power to charge CIL on most types of development.  The money raised through CIL has to be ring-fenced by the LPA to be spent on infrastructure to support development in the relevant area.

CIL is intended to be in addition to contributions under section 106 agreements, which will continue to have a role in mitigating the site-specific impacts of a development and for affordable housing provision.

CIL is voluntary for LPAs; they do not have implement CIL.  However, before an LPA can implement it, they must prepare a charging schedule, which will form part of the local development framework.  The charges will be index-linked on an annual basis to a construction costs index.

Before a final charging schedule is introduced, the LPA must consult on the proposed charging schedule (it is suggested for at least a 6 week period) and then the draft charging schedule must be examined by an independent and appropriately qualified person - most likely a member of the Planning Inspectorate with the assistance of the Valuation Office Agency.

The examiner may approve, reject or amend the proposed charging schedule.  The LPA must take into account the examiner`s recommended amendments before approving a charging schedule.

The mechanism for payment and who is liable for CIL is a very complex area, which we will cover in a future factsheet.  For the moment, you will need to be aware that:

  • We are looking at a lead-in time of probably around 1-2 years for even the keenest LPA to have a charging schedule in place.
  • An incoming Conservative government would scrap CIL.
  • For LPAs which currently operate a tariff system (similar to CIL-type arrangements) that they apply when calculating section 106 contributions - such as the Crossrail contribution in Greater London - these arrangements will need to be migrated across to proper CIL arrangements over a transition period, currently proposed as 2 years.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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