The Infrastructure Levy – a new tax on development

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)

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The 2008 Act as originally enacted does allow CIL to be spent on affordable housing, but the Community Infrastructure Regulations 2010 (CIL Regulations) disapply this.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

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. 

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.

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).

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.

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.

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.