Since April 2010, the Community Infrastructure Levy has allowed local authorities in England to raise funds for new building projects from developers. The funds raised from this levy go to towards roads, flood defences, schools, hospitals, parks, green spaces, leisure centres, and health facilities. Only very small projects avoid the levy, as it is seen as a way to balance projects that create a larger strain on local resources with necessary developments in the infrastructure.
The size of the levy is at the discretion of the individual local authorities, and they are encouraged to maintain rates which do not ‘put at serious risk the overall development of their area’.
Who is Exempt from the Levy?
Buildings that people commonly use (and will therefore put additional strain on the infrastructure) are all subject to the Community Infrastructure Levy. Only structures that aren’t buildings (such as pylons and wind turbines) and buildings that are only entered intermittently (such as those around fixed machinery) are exempt.
If a project does not increase the amount of floor space in a building, it is also exempt since the charges are in pounds per square metre. However, if the new build is a conversion to residential then the new residential unit becomes liable for CIL. This means that new builds are the main contributors towards the community infrastructure, so redevelopment work is not discouraged.
If a new build is under 100 square meters of gross internal floor space, is it not yet liable to pay.
Great emphasis is placed on ensuring that the levy doesn’t prevent desirable developments from being built. As such, local authorities can provide relief from paying the levy if the developers or landowners cannot afford to pay. These cases are dealt with individually.
There are three main criteria to gain relief:
- There must be a section 106 agreement on the planning permission.
- The authority must agree that the cost of complying with the section 106 contributions is greater than the levy’s charge on the development, and ‘paying that full charge would have an unacceptable impact on the developments economic viability’.
- The relief must not constitute a ‘notifiable state aid’.