The procedural and rigid nature of the Community Infrastructure Levy regime (CIL), under the Community Infrastructure Levy Regulations 2010 (as amended), can often result in charging authorities’ hands being tied and developers bound to hefty CIL bills without options, stemming from the day applications for planning permission are submitted.
It is worthwhile for developers, landowners and agents to consider CIL at pre-planning stages to avoid having an inflexible planning permission, bound by a CIL liability unable to be reduced by relief or exemption.
Description of development
The description of the proposed development is crucial in ensuring that CIL can be properly apportioned and triggered correctly. Consideration as to the timing of the payment of CIL can be vital for cashflow. CIL liability arises on the date the planning permission first permits development. When the planning permission “first permits development” is different depending on the planning permission being in outline or full, and further consideration should be given when a s.73 retrospective permission is granted.
CIL is due following commencement of development (usually within 60 days unless an instalment policy is given). The description of development should therefore be drafted to include the correct description of the elements of the development to which the CIL will be liable.
Following on from this, phasing a development is a key way to apportion the CIL liability between different land interests and to prevent triggering CIL for the entire development by providing multiple triggers across the site.
Phasing
Phasing is most often used for custom and self-build developments but can be a benefit for all developments. A correctly phased planning permission (via the description of development and phasing plans) provides each separate phase to be its own chargeable development and trigger separate CIL liabilities upon commencement of each phase. This allows for infrastructure phases to be carried out first, without triggering the CIL liabilities for individual plots.
Due to the timing of the progression of development that a correctly phased planning permission allows, this enables individual self-builders to follow the self-build exemption procedure and apply for this prior to commencement of their individual developments.
Failure to gain a phased planning permission can result in large CIL liabilities being due upon commencement of development without the ability for self-build exemptions or other reliefs to be applied for and granted.
Demolition
One opportunity within the CIL regulations is the ability to deduct buildings to be demolished from the overall CIL liability, reducing the CIL payable for the development.
CIL is calculated using the gross internal area of new buildings. Within the formula for calculating the CIL liability is a formula to deduct the gross internal area of buildings to be demolished as part of the planning permission.
It is crucial that these buildings are situated on the site upon the date of commencement and are lawfully in use buildings, being a building in lawful use for six months within the past three years. If demolition takes place prior to the commencement of development, or is not part of the planning permission, then no demolition deduction can be made and there is no way of retrospectively changing this once the building has been demolished.
If demolition is due to be a part of development this needs to be considered at the application and development planning stages to achieve a deduction from the CIL bill.
In use
Similar to how the CIL regulations treat buildings to be demolished, buildings which are currently in use and are to be retained as part of the development can be deducted from the CIL liability of new development.
To count as an in use building to be retained, the buildings (or part) must have been lawfully in use for a period of six months within the past three years from the date the planning permission first permits the development. Care should be taken here as to whether the buildings have a lawful use and that the timeframe for their use has not expired.
It is crucial therefore that when one is considering development that buildings currently situated on site are taken account and correctly used to achieve the greatest benefits from the CIL regulations.
Reliefs
There are multiple reliefs and exemptions available to reduce the CIL liability for a development or exempt a developer completely, including charitable relief, exemptions for annexes or extensions and self-build exemptions. To benefit from any of these the correct procedures and forms will need to be filled out and the relief or exemption granted prior to the commencement of development.
Failure to gain the relief or exemption from the local authority prior to starting work on site will likely remove the ability to benefit from these reliefs or exemptions with no power to retrospectively apply following the commencement of development.
As these provide the potential ability to reduce the CIL liability down to zero, it is crucial to get this right and follow the procedure exactly.
Developers and landowners considering the ramifications of CIL at as early a stage as possible in their development process can assist in avoiding large CIL liabilities and preventing the loss of CIL relief or exemptions. Legal advice should be sought at these early stages.
Key Contacts
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2023.