The Community Infrastructure Levy (CIL) is a charge that local planning authorities can levy on new development to fund infrastructure needed to support growth. CIL is separate from planning gain obligations under Section 106, and can represent a significant cost on larger residential and commercial projects. Crown Architecture & Structural Engineering Ltd helps clients understand and manage their CIL liability as part of the planning process. This guide explains how CIL works, who pays it, and how it can be reduced or exempted.

What is CIL?

The Community Infrastructure Levy is a statutory charge introduced by the Planning Act 2008 and implemented through the CIL Regulations 2010 (as amended). It allows LPAs that have adopted a CIL Charging Schedule to levy a charge on new floorspace created by development, expressed in pounds per square metre of net new chargeable floor area. CIL receipts are used to fund a wide range of local and strategic infrastructure — roads, schools, parks, leisure facilities, and flood defences.

Not all LPAs have adopted CIL. Where an LPA has not adopted a CIL Charging Schedule, the levy does not apply. You can check whether your LPA charges CIL through the Planning Portal or the LPA’s website.

How is CIL Calculated?

CIL is calculated by multiplying the net chargeable floor area (in square metres) by the applicable CIL rate (in £/m²) and an index adjustment for construction cost inflation.

The formula is: CIL = A × B × I

• A = Net additional floor area of the development (gross new floor area minus any existing floor area being demolished, subject to eligibility rules)
• B = Applicable CIL rate for the relevant zone and development type
• I = Index adjustment factor (based on BCIS all-in tender price index)

CIL rates vary by development type (residential, commercial, retail, student accommodation) and by zone within the LPA area. In high-value London boroughs, CIL rates for residential development can exceed £600/m². On a 200m² extension, this could represent a CIL liability of £120,000 or more.

Who Has to Pay CIL?

CIL is payable by the “collecting authority” (the LPA or Mayoral Development Corporation) from whoever assumes liability before development commences. Liability must be formally assumed by submitting an “Assumption of Liability” form before or at the point of making the planning application. If no one assumes liability, the liability falls on the landowner by default.

CIL Exemptions

Several categories of development are exempt from CIL:

Self-Build Exemption

A person building their own home (or commissioning a dwelling for their own occupation) can apply for a self-build CIL exemption. The exemption covers the whole building. To qualify:

• The applicant must assume liability before development commences
• A self-build exemption form must be submitted before commencement
• The owner must occupy the dwelling as their principal residence for 3 years after completion — if they sell within 3 years, the CIL disqualification payment becomes due

Self-build exemption is one of the most valuable CIL reliefs available to homeowners building a new house on their own land.

Residential Annexe and Extension Exemption

A residential annexe or extension to an existing dwelling is exempt from CIL where:

• The extension is of a dwelling occupied as a principal private residence (PPR) by its owner
• The annexe or extension does not comprise a separate dwelling
• The exemption form is submitted before commencement

This exemption is crucial for homeowners extending their own home — without it, large extensions in high-CIL areas could attract five- or six-figure charges.

Charitable and Social Housing Exemptions

Development by charities for charitable purposes, and affordable housing provided as part of a Section 106 obligation, are exempt from CIL. Specific rules and application requirements apply.

Minor Developments

Development of less than 100m² net new floor area is generally not chargeable, subject to the development not creating a single dwelling. However, there are exceptions and the thresholds should be verified with the relevant LPA.

CIL and Mayoral CIL (London)

In London, there are two layers of CIL:

• Borough CIL: Set by the London Borough and applied to most development types within the borough
• Mayoral CIL (MCIL2): A separate charge set by the Mayor of London, currently £60/m² for Zones 1 and 2 and £25/m² in outer zones for residential, and £20/m² for commercial. Applied to developments over 100m² GIA

Both charges may apply to the same development. Self-build and annexe exemptions apply to borough CIL but Mayoral CIL exemptions have different rules — confirm with the LPA before assuming full exemption.

CIL Payments and Timing

CIL is not payable at planning application stage but becomes due once development commences. The collecting authority issues a Demand Notice after the commencement of development. Payment is typically due in instalments; interest and surcharges apply for late payment. The LPA can register a Local Land Charge against the property for unpaid CIL, which will appear on searches and affect sale of the property.

Section 106 Obligations and CIL

CIL is intended to replace some of the generic infrastructure contributions previously collected through Section 106 agreements. Where CIL applies, Section 106 contributions are restricted to site-specific mitigation directly related to the development (e.g. highway improvements serving the site, school places directly generated by the development). General infrastructure contributions cannot be doubled up through both CIL and Section 106.

Challenging CIL

The CIL charge can be challenged through a formal appeal process. Grounds for appeal include miscalculation of the chargeable amount or incorrect application of the CIL Charging Schedule. A formal “review” must first be requested from the collecting authority before an appeal can be made to the Planning Inspectorate.

How Crown Can Help

Crown Architecture & Structural Engineering Ltd advises clients on CIL liability as part of the planning process — identifying applicable rates, confirming exemption eligibility, submitting exemption and liability forms at the correct stage, and ensuring CIL costs are factored into project feasibility. Call us on 07443804841 to discuss CIL for your project.

Frequently Asked Questions

Is CIL payable on a loft conversion?

If the loft conversion is to an owner-occupied principal residence, the residential extension exemption applies and no CIL is payable, provided the exemption form is submitted before commencement. If the property is let or not the owner’s PPR, the exemption does not apply and CIL may be chargeable.

Does CIL apply to commercial development?

Yes, where the LPA has set a CIL rate for commercial development. Many LPAs charge CIL on retail and student accommodation but set the rate at £0/m² for offices and industrial. The applicable rates depend on the LPA’s Charging Schedule.

What happens if I start development before submitting CIL forms?

Starting development before submitting an Assumption of Liability form and (where applicable) a Commencement Notice results in the loss of any exemption or relief that would otherwise have applied. Surcharges may also apply. Always ensure all CIL paperwork is submitted before any works commence on site.

Can CIL be paid in instalments?

Yes — many LPAs offer instalment payment policies allowing CIL to be paid over 12–24 months from commencement. The terms depend on the LPA’s policy. Interest-free instalment periods may apply.

Is CIL deductible as a development cost for tax purposes?

CIL is generally treated as a capital cost of development for tax purposes. Where a property is held as a business asset or as part of a development business, CIL may be deductible in calculating taxable profit. Tax advice should be obtained from a qualified accountant on the specific circumstances.