SPC logoClerk's Briefing -
4 Community Infrastructure Levy
  1. WHAT IS THE COMMUNITY INFRASTRUCTURE LEVY (CIL)? Introduced by Government in 2010 and amended in 2011, CIL is a new tax that the District Council in this area, as well as other local authorities in England and Wales, can choose to charge on most new developments in their areas that involve an increase in floor space.

    New buildings, or extensions to existing buildings, are liable for the charge if the charging schedule was in place when planning permission was granted. Development under "permitted development" is also included.

    There are also 3 main types of relief from the levy:
    1. charitable relief - a mandatory exemption for a charity if it owns part of the land, and the development will be used wholly or mainly for charitable purposes
    2. social housing relief - a mandatory exemption for all forms of affordable housing
    3. exceptional circumstances - charging authorities have the option to offer relief in cases where the levy would have an unacceptable impact upon the economic viability of a development

    The CIL will largely replace the existing system of Section 106 obligation from April 2014, whereby developers have provided contributions towards infrastructure eg Under a 106 agreement, the Park View development in Sedlescombe was required to provide bus stop improvements including new bus shelter (not yet implemented) and the developer of the 6 large properties on the Pestalozzi Estate had to provide the new junction of Chapel Hill and the B2244 (implemented in 2012).

    According to a Mid Sussex District Council Report dated 30/05/12, Section 106 obligations will still be used to provide some on-site infrastructure if necessary to make a development acceptable in planning terms.

    Planning obligations (private agreements between the local planning authority and the developer) will continue to play an important role in helping to make individual developments acceptable to local planning authorities and communities. For example, new affordable housing will continue to be delivered through planning obligations rather than the levy. However, reforms have been introduced to restrict the use of planning obligations. Some have been introduced already and others will take effect from April 2014 or as soon as a charging authority starts to charge the level. Most importantly, after April 2014, planning obligations can no longer be used as the basis for a tariff to fund infrastructure.

  2. ARE THERE EXCEPTIONS/EXEMPTIONS? Yes. The CIL Regulations exempt the following types of development from paying a CIL charge:
    1. Social (affordable) housing;
    2. Development by charitable institutions;
    3. Changes of use that do not increase floorspace;
    4. Buildings into which people do not normally go or go only intermittently for the purpose of maintaining or inspecting machinery;
    5. Buildings with temporary planning permissions.
    6. New development with a gross internal area of less than 100 square metres, except for new homes.

    1. The Levy is a fixed, non-negotiable charge relative to the size and type of the chargeable development.
    2. It is fairer, more transparent and less time-consuming than the current system of Section 106 obligations.
    3. It is more predictable as the charge does not have to be justified for each development, unlike the current Section 106 regime, and so communities will have more certainty about the CIL receipts of potential future development and can plan ahead for infrastructure delivery more effectively.
    4. Local communities will have a clearer understanding of how new development contributes to infrastructure.
    5. A CIL can be levied on most types of new building projects to ensure that most new development contributes towards the provision or enhancement of the infrastructure it relies upon. However, Section 106 agreements are negotiated on a case-by-case basis and usually only apply to larger housing developments. This results in nationally only 6% of all planning permissions paying towards the cost of supporting infrastructure.
    6. The CIL Regulations introduce more robust enforcement provisions than under the Section 106 system, to protect from late payment and non-compliance. According to Rother, where development has started and the levy has not been paid, the authority may issue a stop notice to stop development from progressing until payment is made. Failure to do so will entail financial penalties which are stipulated in the Regulations.
    7. From April 2014, Section 106 agreement obligations cannot effectively pool infrastructure contributions and CIL will be the only mechanism for delivering off-site infrastructure from developer contributions.
    8. It is expected that the Levy on new development would generate higher levels of contributions from developers than the current Section 106 process.

  4. HAS ROTHER CHOSEN TO INTRODUCE CIL IN THIS AREA? Not yet. Before introducing the levy, as part of the Local Development Scheme, Rother will be working with infrastructure providers during this year to provide evidence of an aggregate funding gap. This will demonstrate the need for CIL.

  5. WHO WILL BE RESPONSIBLE FOR COLLECTING THE LEVY? These bodies are known as "charging authorities". For the most part, in this area, Rother Planning Authority will be responsible for collecting the levy. It will, therefore, be both the charging and collecting authority. However, the County Council also grants permission for certain developments and in these cases, they would be responsible for collecting the levy on behalf of Rother.

  6. HOW WILL A CHARGING AUTHORITY SET A RATE FOR THEIR LEVY? Charging authorities must adopt a charging schedule. The levy should be set at a rate that is a balance between collecting revenue to fund infrastructure and ensuring that the rates are not so high that they put development across the area at serious risk. The rates have to be supported by evidence, such as the economic viability of new development and the area's infrastructure needs. Charging authorities must consult their local communities, including local businesses and neighbouring authorities, regarding their proposed rates for their levy. The schedule must also undergo a public examination by an independent person before it can be officially approved.

    In Rother, once the CIL Examination is over, and depending on comments received and on the Inspector's Report expected in about June 2014, the charging schedule is expected to be adopted as quickly as possible. According to the published timetable, Rother should have an "adopted charging schedule" in place around September 2014.

    It is Rother's current intention to implement differential rates as a way of dealing with variations in economic viability within the same charging area. This makes CIL more flexible to local conditions. It is accepted that, across East and West Sussex, there are significant variations in viability dependent on many variables. Rother is, currently, unable to give even a tentative figure that might be adopted as the CIL in this area.

    As an example, Mid-Sussex District Council consulted in February 2012 on a proposed charge of £210/sq.m. on new dwellings other than "affordable dwellings which are exempt" in the 'Village Zone' and a charge of £235/sq.m. on those in the 'Rural Zone'. Slaugham Parish Council's Neighbourhood Plan shows a total of £803,700 to be collected in their parish if 38 homes are built or £1,503,000 if the alternative scheme of 75 homes is adopted. They have also detailed a series of parish projects totalling £2,380,000 which the levy could be used to support.

  7. WHAT ABOUT EXISTING PLANNING PERMISSIONS THAT HAVE NOT BEEN IMPLEMENTED? WILL THE LEVY BE CHARGEABLE ON COMMENCEMENT OF THEIR DEVELOPMENT? No. If the future, once a CIL scheme has been adopted,when Rother grants planning permission for what it considers to be a chargeable development, it must pass over details to the collection authority (ie another department of Rother) within 14 days of granting permission and issuing appropriate notices (Regulation 77). Rother interprets this as meaning that liability for CIL cannot be retrospectively applied to existing permissions.

  8. WHO IS LIABLE TO PAY THE LEVY? An individual or organisation (for example the developer) may assume liability for payment of the levy. If no one assumes liability, the landowner is or the landowners are automatically liable for the charge without such facilities as any instalment regime the authority may have in place. Where more than one person is involved, the authority must apportion liability following a formula set out in the Regulations.

  9. WHEN DO THEY HAVE TO PAY? If someone assumes liability, then they will be allowed to pay the levy within a specified extended period of time. However, if no one assumes liability the charge is immediately payable by the landowner as soon as development work starts. If someone does assume responsibility for the levy, and the authority has adopted an instalment policy, the frequency of the instalments is specified in the regulations and is dependent on the chargeable amount. If it is equal to or greater than £40,000, payment will be due in 4 equal instalments at the end of 60, 120, 180 and 240 days beginning with the intended commencement date of chargeable development. Instalment periods for other levels of chargeable amount are detailed in the regulations.

    There is also a regulation for someone who has assumed responsibility for paying the levy but fails to pay all its charge. Then a "default liability notice" is issued by the collecting authority to the owners of any material interest in the land. Where no instalment policy is in place, then payment is due in full at the end of 60 days after development has started.

    In Rother, no decision has been made regarding implementation of the instalment protocol as part of the CIL charging regime. This will be dependent on software capacity and resource implications on the Council. The Planners say, currently, that it may be appropriate to have an instalments protocol in place to align with phasing of large projects coming forward.

  10. WHAT CONSTITUTES THE START OF DEVELOPMENT WORK? By virtue of sec.56(4) of the Planning Act 1990, commencement of development is taken to be initiated if any material operation or change of use comprised in the development is carried out. Material operations would constitute:
    1. Any work of construction in the course of erection of a building.
    2. Any work of demolition of the building.
    3. The digging of a trench which is to contain the foundations, or part of the foundations of any building.
    4. The laying of any underground main pipe to the foundations or part of the foundations of a building or to any such trench mentioned in bullet point 3 above.
    5. Any operation in the course of laying out or constructing a road or part of a road.
    6. Any change in the use of the land which constitutes material development.

  11. HOW IS THE LEVY PAID?The charge must be levied in pounds sterling per square metre and will be collected, in most cases, as a cash contribution. In some cases, it may be more appropriate to transfer land to the charging authority as payment of the charge. In such cases, a number of conditions must be met. In particular, the land must be used to provide - or facilitate the provision of - infrastructure to support development in the area.

  12. WHAT INFRASTRUCTURE CAN BE FUNDED BY THE LEVY? Funds raised through CIL must be spent on the infrastructure needed to support new development and can be pooled from a variety of new developments to fund infrastructure. The Planning Act 2008 provides a wide definition of infrastructure which allows the Levy to be used to fund a very broad range of projects and facilities. These can include transport, schools, hospitals, social care, play areas, parks, green spaces, flood defences and leisure centres and should not be used to remedy pre-existing deficiencies in infrastructure provision unless they will be made worse by new development.

    Section 106 Obligations may still be used to deliver necessary on-site infrastructure needs and mitigation measures. Section 278 agreements will continue to be used to secure necessary highway improvements to make developments acceptable in planning terms.

  13. PARISH COUNCIL INVOLVEMENT IN CIL. On 10/01/13, the Government announced as follows: "Neighbourhoods that take a proactive approach by drawing up a neighbourhood development plan, and securing the consent of local people in a referendum, will receive 25% of the revenues from the Community Infrastructure Levy (CIL) arising from the development that they choose to accept. This cash boost will be paid directly to parish and town councils and can be used to back the community's priorities for example to re-roof a village hall, refurbish a municipal pool or take over a community pub. Neighbourhoods without a neighbourhood development plan but where the levy is still charged will still receive a capped 15% share of the levy revenue arising from development in their area."

P J Raymond
Sedlescombe Parish Council
8 February 2013