There have already been three amendments to the replacement for section 106 agreements. Claire Dutch clarifies the issues.

The Community Infrastructure Levy was brought into force in 2010 to provide speed and certainty to the way in which funds are raised from developments for infrastructure. However, there have already been three sets of amendment regulations and the government is consulting on the fourth. CIL has not been as straightforward as hoped and its application has raised a number of practical issues. Here we answer some of the most frequently asked questions.

  • I need to make some tweaks to my development and I have already paid CIL. Do I need to pay it again if the council approves the amendments?

It depends on how the amendments are approved. If your changes are approved under section 96A of the Town and Country Planning Act 1990, you will not need to pay CIL. However, in order to obtain a s96A approval, the changes must be non-material. What is “non-material” is at the discretion of the local authority, which must look at the proposed change in the context of the whole development scheme for which permission was originally granted. What is a minor change on one scheme may be material for another.

If the change is more substantial but does not radically alter the scheme, you may be able to submit an application under section 73 of the 1990 Act if a planning condition can be varied to give effect to your proposed amendments. If a section 73 application is approved, you will be granted a new planning permission subject to different conditions. Therefore, you will have the benefit of two permissions – the original and the new permission – and can implement either.

The CIL liability in relation to section 73 consents is a little complicated. When CIL was first introduced, there was no exemption in relation to planning permissions granted under section 73. Much to the alarm of the development industry, the implementation of section 73 planning permissions attracted full CIL liability. Understandably, many schemes that had already commenced were stalled while developers put their amendment applications on hold to avoid the prospect of paying CIL twice. Thankfully, this problem was resolved by new regulations which came into force late last year. The starting point is that CIL liability needs to be calculated on the floorspace of the section 73 development scheme and then:

  • If there is a change in CIL liability (an increase or decrease), CIL will be charged on the most recently commenced or re-commenced scheme.
  • If CIL has already been paid in relation to the original scheme, that payment can be off-set against the new liability or some CIL will be repaid.
  • If CIL was not payable on the original scheme, then the hypothetical payment of the original scheme needs to be calculated. The CIL liability for the section 73 scheme is the difference between the two schemes.
  • I need to start on site as soon as possible. Can I just start or do I need to wait for a CIL Demand Notice?

There is an administrative and somewhat bureaucratic process to be followed which means that if you jump the gun, you could get into hot water, particularly if you are claiming relief from CIL.

The starting point is that whoever has decided to be liable for CIL (ie the landowner, lessee etc) must serve an Assumption of Liability Notice on the Charging Authority (usually the local authority). Once you have cleared the pre-commencement conditions on your planning permission (or have had reserved matters approved under an outline permission), the Charging Authority must send you a Liability Notice as soon as practicable. This is when the CIL rate and amount is set. You must then serve a Commencement Notice no later than the day before the commencement of the development which, by law, must refer to the Liability Notice which has been issued. You will then receive a Demand Notice from the Charging Authority. CIL is payable in most cases 60 days from the date of commencement of the development.

Therefore, you should not start your development until you have discharged all the pre-commencement conditions, the Charging Authority has served a Liability Notice and you have then served a Commencement Notice.

If you do start your development before serving a Commencement Notice, there is a provision which allows the Charging Authority to deem the development to have commenced on the day work started. The Council would then serve a Demand Notice. However, you should always ensure that you have cleared all relevant planning conditions before you start as otherwise you are at risk of planning enforcement action. Importantly, if you are claiming relief from CIL (eg social housing relief or charitable relief), your claim will lapse if you start before the Charging Authority has issued a decision on your claim or if you have not served a Commencement Notice.

This highlights the need to keep in close contact with the Charging Authority to ensure that it issues a decision on your relief claim, discharges the planning conditions and issues a Liability Notice without delay.

Quick Questions

Q – I’ve not implemented my planning permission and have heard that CIL is about to be adopted in my area. Do I need to pay it when I start building?

A – No. If the Charging Authority has not adopted a CIL Charging Schedule by the time that your planning permission has been granted, you will not need to pay CIL.

Q – I’ve been granted planning permission today and CIL is in force. I am not going to implement for a couple of years. What CIL rate will I be paying?

A – The CIL rate will be determined at the point at which “the planning permission first permits the chargeable development”. This means, in the case of a full planning permission subject to pre-commencement conditions, the day on which the final pre-commencement condition is discharged. For an outline planning permission, this means the day of approval of the last reserved matter for the development or, if phased, the approval of the reserved matter for that phase.

Q – I have an unimplemented planning permission from 2009 which is about to expire and I have applied to extend it. As CIL has been adopted in the meantime, will I need to pay it?

A – No, CIL is not payable on applications to extend the life of a permission.

An earlier version of this article was published in Estates Gazette on 1 June 2013.