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Comprehensive Guide to Community Infrastructure Levy (CIL) Rates
The Community Infrastructure Levy (CIL) is a planning charge introduced by the Planning Act 2008 as a tool for local authorities in England and Wales to help deliver infrastructure to support the development of their area. This guide provides everything you need to know about CIL rates, calculations, exemptions, and strategic planning considerations.
What is the Community Infrastructure Levy?
CIL is a fixed charge per square metre on new development that local authorities can choose to implement. The funds raised through CIL are used to fund infrastructure projects such as:
- Transport improvements (roads, cycle paths, public transport)
- Schools and educational facilities
- Healthcare facilities
- Leisure and community centres
- Green spaces and parks
- Flood defences
How CIL Rates Are Determined
CIL rates vary significantly between different local authorities and are determined through several key factors:
- Local Authority Charging Schedule: Each council that adopts CIL must prepare and publish a charging schedule setting out the rates for different types of development in their area.
- Development Type: Rates differ based on use classes (residential, retail, office, etc.). Residential developments typically attract the highest rates.
- Location Zones: Many authorities divide their area into different zones with varying rates to reflect different infrastructure needs and land values.
- Indexation: Rates are indexed annually in line with the national All-in Tender Price Index to account for inflation.
Current CIL Rate Examples (2024)
The following table shows representative CIL rates from different authorities. Note that actual rates may vary and should always be confirmed with the relevant local authority:
| Local Authority | Residential (£/m²) | Retail (£/m²) | Office (£/m²) | Industrial (£/m²) |
|---|---|---|---|---|
| London Borough of Camden | £400 | £150 | £185 | £5 |
| Manchester City Council | £180 | £120 | £80 | £0 |
| Birmingham City Council | £120 | £80 | £60 | £10 |
| Leeds City Council | £100 | £70 | £50 | £0 |
| Bristol City Council | £275 | £150 | £100 | £25 |
How to Calculate Your CIL Liability
The basic formula for calculating CIL is:
Net Chargeable Area (m²) × CIL Rate (£/m²) = Gross CIL Liability
However, several adjustments may apply:
1. Chargeable Area Calculation
The chargeable area is typically the gross internal area (GIA) of the new development, but there are important considerations:
- For new build developments, it’s the total GIA of all new floorspace
- For change of use, it’s the GIA of the floorspace after the change
- For extensions, it’s the additional GIA created
- Certain areas may be excluded (e.g., basements in some authorities)
2. Reliefs and Exemptions
Several types of relief may reduce your CIL liability:
- Affordable Housing Relief: The affordable housing portion of residential developments is typically exempt from CIL
- Charitable Relief: Charities may qualify for 50-100% relief on development for charitable purposes
- Social Housing Relief: Development by registered providers for social housing may be exempt
- Self-Build Exemption: Available for individual self-build homes (subject to conditions)
- Small Developments: Some authorities offer relief for developments under certain size thresholds
3. Indexation
CIL rates are adjusted annually using the BCIS All-in Tender Price Index. The formula for indexation is:
Adjusted Rate = Published Rate × (Index for charging year / Index for rate-setting year)
Strategic Considerations for Developers
Understanding CIL implications is crucial for development viability. Consider these strategic points:
- Pre-Application Engagement: Discuss CIL implications with the local authority early in the planning process to understand potential liabilities.
- Phasing Considerations: For large developments, phasing can help manage cash flow as CIL becomes payable when development commences.
- Viability Assessments: Prepare detailed viability assessments to support negotiations on affordable housing levels, which can impact CIL liability.
- Payment Timing: CIL is typically payable in instalments, with the first payment due when development commences. Understand the payment schedule.
- Appeals Process: There is a formal process to appeal CIL liability notices if you believe there are errors in the calculation.
Common CIL Calculation Mistakes to Avoid
Even experienced developers can make errors in CIL calculations. Watch out for these common pitfalls:
- Incorrect Area Measurement: Using net internal area (NIA) instead of gross internal area (GIA) can lead to significant underestimation.
- Ignoring Indexation: Forgetting to apply the annual indexation adjustment to published rates.
- Misapplying Reliefs: Incorrectly calculating affordable housing relief or charitable relief percentages.
- Zone Misidentification: Using the wrong zone rate for developments that span multiple charging zones.
- Timing Errors: Not accounting for the specific timing of when CIL liability crystallises (typically on commencement of development).
- Change of Use Oversights: Failing to properly account for change of use scenarios where different rates may apply.
CIL vs Section 106 Agreements
Developers often confuse CIL with Section 106 (S106) agreements. While both contribute to infrastructure funding, they serve different purposes:
| Feature | Community Infrastructure Levy (CIL) | Section 106 Agreements |
|---|---|---|
| Legal Basis | Planning Act 2008 | Town and Country Planning Act 1990 |
| Purpose | Fund general infrastructure needs | Mitigate specific impacts of development |
| Calculation | Fixed rate per m² | Negotiated based on development impact |
| Flexibility | Non-negotiable rates | Site-specific and negotiable |
| Payment Timing | On commencement of development | Trigger points agreed in legal agreement |
| Use of Funds | Pooled for strategic infrastructure | Tied to specific mitigation measures |
Recent Changes and Future Trends in CIL
The CIL regime has evolved significantly since its introduction. Key recent developments include:
- Mayoral CIL in London: The London Mayor introduced an additional Mayoral CIL (MCIL) to fund Crossrail and other strategic transport projects, adding to borough CIL charges.
- Simplified Charging Schedules: Some authorities are moving toward simpler, zonal approaches to reduce complexity.
- Increased Reliefs: Expansion of reliefs for self-build and custom build housing to support housing diversity.
- Digital Transformation: Many councils are implementing online CIL calculators and payment portals to improve transparency.
- Viability Testing: Greater scrutiny of viability assessments to ensure appropriate CIL rates that don’t undermine development.
Looking ahead, we may see:
- Further integration of CIL with local plan policies
- More sophisticated indexing mechanisms
- Potential reforms to the appeals process
- Increased use of CIL for climate change mitigation infrastructure
Practical Steps for Developers
To effectively manage CIL obligations:
- Early Assessment: Conduct a preliminary CIL assessment during site appraisal to inform land valuation.
- Professional Advice: Engage planning consultants with CIL expertise to review calculations.
- Documentation: Maintain thorough records of area calculations, relief claims, and communications with the authority.
- Payment Planning: Incorporate CIL payments into development cash flow projections.
- Monitor Changes: Stay informed about rate reviews and charging schedule updates in your target areas.
- Consider Alternatives: In some cases, S106 agreements may offer more flexibility than CIL for certain development types.
Frequently Asked Questions About CIL
Q: Is CIL payable on all new developments?
A: Not all developments are CIL-liable. Small extensions (typically under 100m²) and certain types of development may be exempt. Always check with your local authority.
Q: When does CIL become payable?
A: CIL becomes payable when development commences, as defined by the CIL regulations (typically when significant preparatory work begins on site).
Q: Can I appeal my CIL liability?
A: Yes, there is a formal appeal process if you believe the liability notice contains errors. Appeals must be made within 28 days of the notice being issued.
Q: How is CIL different from the old Section 106 system?
A: While both contribute to infrastructure funding, CIL is a standardised charge based on floorspace, whereas S106 agreements are site-specific and negotiated to mitigate particular impacts.
Q: Are there any exemptions for affordable housing?
A: Yes, the affordable housing portion of residential developments is typically exempt from CIL, though the exact treatment varies between authorities.
Q: How is CIL indexed for inflation?
A: Rates are adjusted annually using the BCIS All-in Tender Price Index. The index figure for the year the chargeable development commences is used to adjust the published rates.