CIL – Community Infrastructure Levy
The Community Infrastructure Levy (CIL) is a planning charge in England and Wales only, originally introduced by the Planning Act of 2008. It is applied by councils when someone secures planning permission for most types of new building. Not all councils levy CIL, so check with yours.
How CIL works
different councils charge different levels of CIL while some don’t charge it at all. Charges vary from £10/m2 to £575/m2.
The tax is paid by the developer and the charging point is the commencement of construction as set out in section 56(4) of the Town and Country Planning Act 1990 – broadly accepted as the point at which some limited works begin on site to implement a planning permission. This includes demolition and other minor groundworks, the digging of trenches, laying of pipes and changes to the use of the land. Find out more on the Planning Portal.
The money raised by the CIL charge is used to fund a wide range of local infrastructure costs such as flood defences, schools, hospitals and other health and social care facilities, parks, green spaces and leisure centres.
Any new build house, flat or an extension of more than 100 square metres gross internal floor space is likely to incur a CIL charge (where a council has introduced the CIL regime).
Self and Custom Build CIL Exemption
The amended regulations came into force in March 2014 but allowed for a CIL exemption for self builders building either a new dwelling, an annex to an existing dwelling or an extension to an existing dwelling intended to be your principal private residence. While this is good news for Self Builders, there are caveats and the procedure to claim exemption must be followed precisely (see diagram below).
CIL exemption - the process
Any exemption must be granted prior to the commencement of the development or the full exemption will not be applied. You will usually need to advise the local planning authority before commencement, so be sure to seek agreement to the formal claim for exemption before starting any work on site.
Individuals wishing to claim an exemption must first ‘assume liability’ for CIL by completing a form, and then apply for the exemption by completing a Transfer of Assumed Liability’ form and submitting it to the council (ie. the ‘collecting authority’) and certifying that their project meets the qualifying criteria by submitting a ‘Self Build Exemption Claim Form – Part 1’.
To secure the full exemption you must apply before you have commenced ANY work, and it is essential that the local authority is notified of the intention to commence the development by submitting a ‘Commencement Notice’ to the council prior to work commencing on site.
Previously, failure to do this meant the full CIL would be payable, but following lobbying work by NaCSBA, in 2019 amendments were made that allowed for late submission – in which case the charge will be limited to a 20% surcharge. See paragraph 7.7 of the THE COMMUNITY INFRASTRUCTURE LEVY (AMENDMENT) (ENGLAND)
(No. 2) Regs 2019 for details. This was because many self builders were missing the deadline and were getting landed with huge bills.
On completion they must submit an ‘Exemption Claim Form – Part 2’ to the council which provides supporting evidence to confirm the project qualifies for relief (this must be done within six months of formal completion of the home).
Timing is critical and the process must be followed precisely to secure the full levy exemption.
The key documents and forms you need can be found on the Planning Portal, together with guidance as to how to apply for a self build exemption:
Serviced plots
If buyers are to benefit from the very substantial value of the CIL exemption for custom and self build, developers of serviced plots must apply for a phased planning permission with each plot constituting a separate phase to ensure that commencement on one part of the site does not trigger the application of CIL on the whole development.
Raise this point with the developer or enabler to confirm they are following the correct process to allow you to secure the exemption.
Government guidance on CIL
Guidance on the CIL exemption is also set out in Government guidance, noticeably The Planning Portal which states the following: houses, flats, residential annexes and residential extensions which are built by ‘self builders’ where an exemption has been applied for and obtained, and, in regard to a self build home or a residential annex, a Commencement (of development) Notice served prior to the commencement of the development (see regulations 42A, 42B, 54A, 54B and 67(1A), inserted by the 2014 Regulations)
Find out more about the Government’s position.
Three year payback rule
It’s important to note that there is a three-year ‘clawback’ arrangement, so if your personal circumstances change and the property is sold within the first three years you must notify the council and the full CIL levy becomes payable. Failure to notify the council will result in enforcement action and surcharges become payable.
Also, if any exempted annex is used other than as part of a single dwelling, is let out or sold (unless as part of the main dwelling and to the same purchaser) then the full levy due will be payable.