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Improving the Community Infrastructure Levy – again…

The Community Infrastructure Levy (CIL) is proving to be a complex regime to get right. Following intense lobbying by the development industry and consultation on proposed amendments in 2013, a further set of changes to the 2010 Regulations came into force on 24 February 2014.

CIL was introduced to help speed up and simplify the planning system and was sold to the development industry as a way of removing the delays and complexities associated with s106 agreements.

In practice, CIL has merely added to the intricate web of procedural requirements and costs associated with development - and the requirement for s106 agreements remains firmly in place in the majority of cases.

Many of the changes will be welcomed in principle, although the result is an increase in the complexity of the calculation and application of CIL.

What are the main changes?

We have summarised the main changes below. Please note that a number of the changes are subject to transitional arrangements. Careful consideration will be required to determine whether the old or the new provisions apply in a particular case.

Setting the levy

  • The government hopes to achieve a more robust examination process by requiring authorities to strike an appropriate balance between maximising CIL and impacting development viability (rather than merely aiming to do so).
  • Differential CIL rates may be set based on the scale (GIA) of development or on the number of dwellings or units. This resolves the question as to whether authorities can impose different CIL rates on small shops and supermarkets or for small residential and strategic sites.
  • A draft Regulation 123 list setting out the infrastructure to be funded by CIL will be provided at examination.
  • The changes will not apply to authorities with a published draft charging schedule.

Calculating CIL liability

  • Previously, each phase of an outline permission triggered a separate CIL payment, enabling the liability to be phased. This now applies to full permissions, but they must expressly provide for development to be carried out in phases. These changes apply only to permissions granted after the changes took effect. 
  • CIL liability is calculated on the date on which a permission "first permits" development.  
  • Full permissions: single phase permissions or phased permissions without pre-commencement conditions now "first permit" development on the date of grant.  For phased permissions with pre-commencement conditions, the permission will "first permit" development of a phase on the discharge of the last pre-commencement condition for that phase.
  • Outline permissions: for single-phase outlines, the date will remain the date of final approval of reserved matters for the phase. For multi-phase outlines, the permission will "first permit" development of a phase on the date of final approval of reserved matters for that phase or, if earlier and if the collecting authority agree in writing before you start any development, the date of final approval of any pre-commencement condition for the phase.
  • To obtain a reduction from CIL in respect of buildings to be retained or demolished as part of a redevelopment, part of those buildings must have been in lawful use for a continuous period of at least six months during the three years (previously one year) before permission "first permits" development. Alternatively, parts of retained buildings will now qualify for a reduction where there is no change of use - the intended use on completion must be one that can take place lawfully without further permission.
  • For phased permissions, where the full benefit is not received for floorspace to be demolished in connection with a phase, that benefit may be rolled forward into the next phase. The financial implications of proposed demolition phasing on CIL should be thought through carefully.

Further changes

Relationship with s106

The introduction of limitations on pooling of s106 contributions is delayed until 6 April 2015. This is the main driver for the introduction of CIL for those authorities with policies for the collection of s106 monies into centralised funds.

Highway agreements

s106 obligations cannot be used to fund infrastructure specified by the authority as being funded by CIL. This is now extended, so that s106 obligations or conditions cannot require s278 highways agreements to be entered into to fund such infrastructure. However, the new provisions do not catch highway agreements with the Secretary of State or Transport for London.

Payment in kind

Authorities may now elect to accept the direct provision of infrastructure in lieu of CIL by a person liable to pay. The infrastructure can be provided inside or outside an authority's area, provided it supports development within the area.

However, if the authority has a Regulation 123 list setting out the infrastructure projects or types of projects funded by CIL, the infrastructure must appear on that list. In addition, it must not be necessary to make the development acceptable in planning terms, thereby excluding infrastructure secured by condition or s106.

In practice, these requirements will limit the application of the new provisions.

The amount offset will be the cost of providing the infrastructure including design costs. The applicant must have or be likely to obtain sufficient control over the relevant land and the relevant consents, and an agreement containing specified terms must be entered into for provision of the infrastructure and its transfer to the Council or its nominee before commencement.


Abatement provisions now apply where new permissions (other than s73 permissions) are obtained in respect of development which has commenced. CIL paid can be credited against the new permission to the extent it relates to buildings which have not been completed and which have not been taken into account in reducing the CIL payable for the new permission.

Development under the old permission must however cease - if recommenced, the abatement will cease to have effect. There are complex provisions for abatement relating to phased permissions and for rolling forward the benefit obtained from buildings demolished under earlier permissions to new permissions.

Social housing relief

Certain affordable rented properties will now be eligible for social housing relief. Charging authorities will also have discretion as to whether to make available relief from CIL for discounted dwellings (sold at up to 80% of open market value) and, if so, to set policies for allocation of relief.

A proportion of relief will also apply to communal areas serving affordable housing and other developments, provided it is not mainly for use by the general public, occupants of development under a different permission or commercial purposes. 

Where a s73 permission is granted in relation to a development awarded social housing relief but the amount of relief does not change, the relief will apply to the new permission. A claim for social housing relief can be submitted after commencement in circumstances where the provision of affordable housing or communal floorspace serving it changes.

Exceptional circumstances relief

The rule restricting this relief to cases where the cost of complying with a s106 agreement exceeds CIL liability no longer applies, although relief will not be applicable unless there is a s106 agreement.

Self-build, domestic extensions and annexes

Exemption from CIL will apply to 'self-build housing' built or commissioned by the person liable to pay CIL and to be occupied by them as their sole or main residence. Those in occupation of a dwelling as a sole or main residence can also extend the dwelling or create a new dwelling in the curtilage of the main dwelling without CIL liability.

Both cases are subject to state aid provisions and there are specific procedural requirements to be followed, else the exemption will be lost.

The relief may become repayable within three years of a completion or final certificate being issued. For annexes, this will apply if the main dwelling is used other than as a single dwelling, the residential annex is let, or the dwelling or annex are sold separately. For self-build, the relief is repayable if the building is sold or let out in its entirety.


Appeals against the amount of CIL charged are now allowed after commencement, but only where a permission is granted after commencement - this may apply to retrospective permissions, s73 or new standalone permissions for developments.  

This article was written by Claire Fallows.

For more information please contact Claire on +44 (0)20 7427 1046 or claire.fallows@crsblaw.com