Further reform of the Community Infrastructure Levy (CIL)

Further reform of the Community Infrastructure Levy (CIL)


Author: Matthew Stimson

Further changes were made to the Community Infrastructure Levy Regulations 2010 (the CIL Regulations) on 24 February 2014.

They present opportunities for developers to better manage their CIL liability, but also add new complexities with which developers and local authorities will need to grapple.

The Community Infrastructure Levy (Amendment) Regulations 2014 address a number of perceived inequities in the rules for calculating, collecting and spending CIL. The key changes are as follows:

  • an amendment to allow CIL to be charged at differential rates according to the scale of development for which planning permission is granted
  • the introduction of a new formula for calculating the chargeable amount of CIL, with changes to the 'vacancy test' for discounting the floorspace of existing buildings
  • the introduction of an exemption for residential annexes and extensions and for self-build housing
  • an extension of affordable housing relief to other forms of affordable housing
  • an amendment to allow for infrastructure to be provided as a payment in kind for CIL
  • the introduction of new rules against 'double dipping' which limit the use of highway agreements to provide infrastructure for which CIL would be payable

In addition, local authorities have a further year in which to adopt a charging schedule before the limits on the use of planning obligations (section 106 agreements) takes effect. The critical date is now 6 April 2015.

Differential rates

The CIL Regulations already allow councils to adopt differential rates of CIL within their area according to locality and the type of development proposed (e.g. retail, residential, employment).

The latest reforms now allow councils to set different rates of CIL according to the scale of development proposed - for example, by reference to the amount of floorspace, or the intended number of units proposed in any scheme. This could potentially benefit small scale development that might otherwise be made unviable by CIL. It might equally be applied to very large schemes such as strategic urban extensions which would involve delivery of significant amounts of infrastructure on site.

All rates of CIL must be justified in terms of striking a balance between the desirability of receiving funding for infrastructure from CIL and the impact on the viability of development within the council's area. The council must also guard against offering unlawful state aid to particular projects in setting the rate of CIL.

Calculating CIL and the Vacancy test

The reforms introduce a new formula for calculating the amount of CIL payable in relation to any given scheme.

This includes a change to the method for discounting the floorspace of any existing buildings to be reused or demolished as part of a development. Such floorspace was previously subject to a 'vacancy test' that those buildings must have been in lawful use for a continuous period of at least six months in the 12 months immediately preceding the date on which planning permission first permits the development. This has clear project management implications for any development which involves obtaining vacant possession or the demolition of existing buildings.

Four key reforms make the vacancy test easier to satisfy and thereby allow for greater flexibility in project managing a development:

  • the vacancy test no longer applies to buildings to be retained for any use to which they could already be lawfully put without planning permission
  • the vacancy test for all other buildings will now require them to have been occupied for six months in the three years (rather than 12 months) immediately preceding the date on which planning permission first permits the development
  • the 'date when planning permission first permits development' now differs according to the type of planning permission that is issued:
    • for a full planning permission it will be the date on which the planning permission is granted. Previously it was the date of satisfaction of the last pre-commencement condition
    • for an outline planning permission, it will be the date of approval of the last reserved matter
    • for a phased planning permission, the date is calculated for each phase individually and will be either the date of approval of the reserved matters for that phase or, where there are no reserved matters for the phase, the date on which the last pre-commencement condition is approved in relation to that phase
  • The discount in relation to the demolition of buildings which satisfy the vacancy test can now be spread over the phases of development

Another helpful reform extends the phasing provisions to 'full' as well as 'outline' planning permissions. Previously, the CIL Regulations only allowed for phasing on outline planning permission. This will allow greater flexibility both in terms of project management and in apportioning CIL liability where the site of the scheme is in multiple ownership.

Residential extensions and self-build houses

Residential annexes are exempt from CIL provided that they comprise just one new dwelling that is constructed entirely within the curtilage of an existing dwelling. Extensions to existing dwellings will be exempt provided that they do not comprise a new dwelling.

An exemption is also introduced for self-build houses. These are defined as a dwelling built by a person for occupation by that person as their main residence. Self-build communal facilities (where they are built for the benefit of more than one occupant of self-build housing) will also be exempt.

A self-built house does not necessarily have to be constructed through the labour of the individual occupant. It would potentially still constitute a self-build house if it were constructed on their behalf by a builder or developer.

The exemption for self-build housing is, however, subject to claw-back if the dwelling ceases to be occupied by the self-builder within three years.

Social housing relief

A number of amendments are made to the rules in relation to social housing relief. These include:

  • extending the types of social housing that qualify for automatic relief to include discount to rental housing provided at no more 80% of market rate
  • introducing a new discretionary relief for discount market housing sold at 80% or less of its market value
  • allowing for communal areas to benefit from relief to the extent that they are intended for use by occupiers of qualifying social housing

In this way, the CIL Regulations are brought into closer alignment with the National Planning Policy Framework in terms of the range of housing types and tenures that constitute affordable housing.

Payments in kind

The CIL Regulations now allow for a developer actually to provide the infrastructure (whether it be a new road, bridge, school, area of open space or other form of relevant infrastructure) and for the cost of the infrastructure to be deducted from the overall CIL charge. Previously, the only form of 'payment in kind' that could be made was the transfer of land.

Infrastructure will not qualify as payment in kind if it is required by planning obligation.

Highway agreements

Regulation 123 limits the powers of councils to secure contributions towards infrastructure by section 106 agreements. This is to prevent 'double-dipping' whereby a developer could be required to pay CIL as well as to deliver or pay for infrastructure under a planning obligation.

The rule against 'double-dipping' is now extended to highway agreements. The CIL Regulations would prevent the imposition of a condition on any planning permission requiring a developer to carry out highway works which would constitute infrastructure for which CIL is payable.

Other minor amendments

A number of other minor and consequential amendments are made to the CIL Regulations. These include changes to the appeals procedure to allow an extension of time to be agreed for responding to representations.


The changes outlined in this briefing address a number of issues arising from previous versions of the CIL Regulations.

Individually, several of the changes introduce potentially significant reforms, which are designed to make CIL a more flexible tool for delivering infrastructure. Collectively, they represent a continuing commitment by the Government to make CIL work.

The reforms do, however, add new layers of complexity to CIL, which arguably take it further from the simple alternative to negotiated planning obligations that was originally envisaged.

About the author

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Matthew Stimson

Senior Associate

03700 86 8467

Matthew has over ten years experience in planning, compulsory purchase orders, regeneration and local government law. He provides focussed technical advice on every aspect of the planning application process including environmental assessment, statutory agreements and planning inquiries.

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