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The Infrastructure Levy – a new tax on development

As we discussed in our article on the Levelling Up and Regeneration Bill (as it was then), the Levelling-up and Regeneration Act 2023 (LURA) sets out the legislative framework for a new planning levy on development, known as the “Infrastructure Levy” (IL).

It is intended that IL would replace Community Infrastructure Levy (CIL) (except Mayoral CIL in London) and potentially accommodate all financial contributions currently dealt with by way of section 106 agreements.

The LURA inserts new provisions into the Planning Act 2008 (2008 Act). The provisions relating to IL are not currently in force – IL will only come into effect on the introduction of secondary legislation setting out the detail of the Levy (draft regulations have yet to be published).

Fundamentally, the majority of provisions in the LURA relating to IL encompass what future regulations can cover and, as with CIL, the important details will be contained in those regulations. As a result, the provisions relating to IL closely mirror the existing framework in the 2008 Act relating to CIL and do not provide for the mechanics of how IL would actually operate.

We summarise below the key provisions introduced by the LURA in relation to the IL.

Differences between the CIL and IL provisions in the Planning Act 2008

The central intended difference between the IL and CIL, as set out in the government’s consultation paper on Exploring the potential effects of the proposed Infrastructure Levy (February 2023)[1] (Consultation Paper), is that IL would be “values based” (including consideration of increase in land value) whereas CIL is a fixed charge broadly based on net additional floor space. As this distinction is not covered by the LURA (but will come forward through regulations) we do not cover this below.

Factor Statutory differences between CIL / IL as set out in 2008 Act
Charging authority

CIL – the local planning authority (LPA)

IL - LPA and/or Homes and Communities Agency (to the extent provided in a designation order made under s13 of the Housing and Regeneration Act)

What “infrastructure” the Levy can be spent on

CIL – (a) roads and other transport facilities, (b) flood defences, (c) schools and other educational facilities, (d) medical facilities, (e) sporting and recreational facilities, and (f) open spaces.

The 2008 Act as originally enacted does allow CIL to be spent on affordable housing, but the Community Infrastructure Regulations 2010 (CIL Regulations) disapply this.

IL – all the infrastructure covered by CIL in addition to: affordable housing, facilities and equipment for emergency and rescue services, facilities/ spaces which preserve or improve the natural environment (or enable enjoyment of it), facilities and spaces for the mitigation of and adaption to climate change

Affordable housing

CIL – as a result of the CIL Regulations, affordable housing is not covered (it is dealt with by way of s106 agreements)

IL – affordable housing is intended to be covered by IL:

  • Charging authorities must seek to ensure that the level of developer-funded affordable housing and level of funding by developers of affordable housing is the same or more than that specified over an earlier period (unless it would be economically unviable)
  • Regulations may make provision as to how the level of affordable housing and level of funding provided by developers is to be measured
  • The Secretary of State is obliged to prepare a report every 5 years setting out the amount of affordable housing provision that has been funded by IL for each charging authority and assess whether this has resulted in more or less affordable housing.

CIL – valuation has no role once a charging schedule is adopted.

IL – as IL is likely to be linked to gross development values, regulations may make provision as to valuation including: what factors may be taken into consideration, who may carry out a valuation, the procedure for a valuation, any documentation that must be prepared, payment of fees, and the consequences of failing to carry out a valuation. 

Thresholds and alteration

CIL – is charged at a fixed rate specified in the adopted charging schedule (there is no scope for consideration of increased costs etc unless exceptional circumstances relief applies – which is rarely the case). However, the charging schedule allows for different rates for different types of development.

IL – regulations may specify a threshold below which IL is charged at a reduced rate, including for the rate to be amended by reference to the costs of development.

The Secretary of State may permit or direct the charging authority to amend charging schedules where the Secretary of State considers that the economic viability of a development is significantly impaired.

Notification of estimated costs

CIL – as a fixed charge payable on commencement, the charging authority is not required to provide an estimate of the amount CIL chargeable.

IL – the charging authority may be required to provide an estimate of the amount of IL that is chargeable (although not specified in the LURA, the Consultation Paper states that IL payments would be made when the development or specified stages are finally occupied).

Compulsory adoption

CIL – the adoption of CIL is discretionary: there is no requirement on LPAs to produce a charging schedule or levy CIL for development.

IL – is intended to be mandatory: regulations may introduce a date by which charging authorities must issue a charging schedule (there will be a minimum of 12 month notice period). If an LPA fails to issue a charging schedule within the prescribed time, the Secretary of State may issue a charging schedule on behalf of the charging authority.

Infrastructure delivery strategy

IL – a charging authority must prepare and publish an infrastructure delivery strategy, setting out provision, improvement, replacement, operation and maintenance of infrastructure in the authority’s area.

Infrastructure delivery strategies may by subject to independent examination and must have regard to guidance published by the Secretary of State.

Surcharge / penalties

CIL – the 2008 Act provides for multiple surcharges, for example for non-payment, each limited to the higher of (a) 30% of the CIL payable; and (b) £20,000.

IL – allows for higher surcharges: a single surcharge or penalty each limited to the higher of (a) 40% of the IL payable; and (b) £50,000.


CIL – Compensation is payable for loss suffered as a result of enforcement action, including suspension / cancellation of a decision relating to a planning permission and the prohibition of development pending assumption of liability / pending payment of CIL.

IL – Compensation is payable as per CIL, but may also include compensation payable for restriction of the use or occupation of all or part of a site pending payment of IL.

Miscellaneous IL regulations may make provision to treat CIL as if it were IL


[1] Produced by the Department for Levelling Up Housing & Communities

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