It might seem an odd time to be publishing our second "Back to Basics" blog on the Community Infrastructure Levy (CIL). We have, of course, recently been blessed with the Levelling Up and Regeneration Bill, which, amongst other things, has given us a glimpse into the new world of CIL's replacement, the Infrastructure Levy (IL). However, CIL will not be abolished altogether, and where it is abolished it will not be going quickly. CIL will continue to operate in Wales and London (Mayoral CIL) and we think it will be at least a few years before we will be fully immersed in the "IL" world across England. This is in large part because charging schedules and related infrastructure delivery strategies will be subject to the public examination procedure, the government intends to adopt a "test and learn" approach (meaning a staggered rollout over "several years"), and there will be transitional provisions for those consents granted under the old regime. So, CIL is here to stay at least for now.

In the first Back to Basics blog post on CIL, we looked at how rates are set, how CIL is calculated and collected, and the main procedural steps for a developer to follow. In this second blog in the series, we will be focusing on exclusions, exemptions, abatement and credits, payments in kind, reliefs, and enforcement.

What is CIL liable development?

CIL applies to "development", which is defined in the Planning Act 2008 to include anything done by way of, or for the purpose of, the creation of a new building; or anything done to, or in respect of, an existing building. Any development that is not a "building" therefore (eg a golf course) will not attract CIL liability but the buildings associated with that development (eg the club house) may be liable.

Exclusions

The following "excluded buildings" are excluded from the definition of development under the Community Infrastructure Regulations 2010 (as amended) (the CIL Regs):

  • buildings into which people do not normally go; and
  • buildings into which people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery.

In addition, the following works are treated as not being development for CIL purposes:

  • creation of, or the carrying out of works to, an "excluded building";
  • the carrying out of any work to an existing building for which planning permission is required because of a provision made under section 55(2A) of the Town and Country Planning Act 1990 (1990 Act) (eg creation of a retail mezzanine over 200 square metres); and
  • the change of use of any building previously used as a single dwelling house to use as two or more separate dwellings.

Exemptions

Exemptions where CIL liability does not arise include:

  • development of less than 100 square metres (unless the development comprises one or more dwellings);
  • houses, flats, residential annexes and residential extensions which are built by "self builders"; and
  • certain charitable development.

Abatements and credits

Where a permission is granted under section 73 of the 1990 Act and CIL was chargeable on the original permission, upon receipt of a new or revised liability notice in respect of the section 73 permission a person liable to pay the CIL may request the collecting authority to credit any CIL paid previously against the new amount due. The same abatement process applies where CIL payments have been made in respect of a development that has commenced but has not been completed under a planning permission (Permission A) and a new planning permission (Permission B) has been granted for development on all or part of the land on which the chargeable development under Permission A is authorised to be carried out. Both forms of abatement avoid developers being charged twice for CIL where liability has already been paid.

Where an original planning permission (Permission A) is granted before CIL came into force in the area and a section 73 permission (Permission B) is granted when CIL is in force (a "transitional scenario"), the CIL charge will only apply to the difference between the liability of the two permissions. So, the charging authority will calculate the CIL that would have been liable on Permission A if a charging schedule had been in force when it was granted and will credit that against the actual liability for the section 73 permission. Also in a transitional scenario, so-called "phased credits" can be created for negative liability in respect of a particular phase (the "donating phase") and applied to a phase where there is actual liability (the "receiving phase"). Phased credits can be used to ensure that CIL liabilities fairly reflect the net change in liability across several phases.

Payments in kind

A liable person may, with the agreement of the charging authority and subject to certain criteria being satisfied, provide land and/or infrastructure in lieu of money to satisfy a charge arising from CIL. In practice we don't see many examples of payments in kind being made – this is most likely because agreeing on appropriate land, its value and/or a scheme for relevant infrastructure is not something the charging authority is willing or able to do quickly, so to avoid delays and complications making payment is usually more straightforward.

Reliefs

CIL reliefs include:

  • Charitable relief for investment activities: this discretionary relief applies to chargeable developments held by a charity, or a charity and other charitable institutions, as an investment from which profit will be applied towards charitable purposes.
  • Social housing relief: this is a mandatory discount that is applied to a range of affordable housing tenures. Charging authorities can also offer discretionary social housing relief in respect of which the charging authority must publish a policy setting out what is required to qualify for the relief.
  • Exceptional circumstances relief: this is a discretionary relief that can be switched on and off after a charging schedule is adopted. It is intended to be used for sites with specific and exceptional cost burdens or other unique circumstances which would mean that to charge CIL would make development of the site unviable.

Reliefs must be applied for and can be clawed back by a charging authority where a disqualifying event occurs.

Enforcement

Collecting authorities are responsible for the enforcement of unpaid CIL debts. The power to take enforcement action is discretionary. Collecting authorities can:

  • impose surcharges;
  • charge interest (2.5% over base rate);
  • issue a CIL stop notice (which prohibits development from continuing until payment is made and the stop notice is withdrawn);
  • recover CIL through asset/land seizure (via liability and charging orders); or
  • commit a person to prison for up to three months (where the debtor is a person).

We hope that this has helped a little with understanding this complex regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.