On 6th August 2008 the Government published further details of the Community Infrastructure Levy, its new tax on development. The powers to impose the tax are contained in the Planning Bill, which provides a framework for detailed regulations which are expected to be in force in 2009. The policy paper explains what the regulations are likely to contain.

The purpose of the CIL is to generate funds for the infrastructure needs of development contemplated by the development plan for the area. It is intended to be forward-looking, and not for remedying existing deficiencies. The CIL will be levied by local planning authorities on a per dwelling, per habitable room, or per square metre basis in accordance with a charging schedule. The regulations will include provisions for determining rates of CIL. In drawing up its charging schedule the local authority may, amongst other things, make reference to the likely increase in value arising from the grant of planning permission. Different charges can be applied to different classes of development, and/or development in different areas.

The local authority will only be able to levy CIL if it is based on an up to date adopted development strategy for the area in which they propose to charge, and following consultation and review in a similar manner as for Local Development Documents.

The CIL is not intended to replace planning obligations. It is, however, clearly intended to be a means by which local authorities can raise additional funds without being constrained by the tests of necessity, reasonableness and relevance to the particular development contained in Circular 5/2005.

The charge is payable on the commencement of development, but the paper suggests that "planning permission" and "commencement" may be defined for the purposes of CIL so that payment does not fall due until all reserved matters have been approved and/or that payments are staged throughout phased developments.

The paper contains a brief reference to the need to ensure that charges are not set at a level which could prejudice the viability of a development and speculates that the number of cases where the level of charge set may not be affordable will be "very small". It recognises the importance of skills needed to assess economic viability and points out that charging authorities will need to identify deficit funds and have skills in funding, financing and infrastructure delivery. There is no reassurance for the development industry that the CIL is contingent upon these skills being resourced and applied effectively or that new infrastructure will be delivered on time.

The proposals as a whole assume that local authority forward planning and assessment of infrastructure requirements will be speedy and efficient, and that the CIL charging regime will be kept under frequent review and applied flexibly. For those local authorities who are not able to achieve these exacting requirements, Section 106 planning obligations will still be available as a means of funding infrastructure.

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The original publication date for this article was 07/08/2008.