Updated: Jan 27
At ICI Architecture Studio this is one of our most common asked questions for clients looking to create new build properties!
CIL or Community Infrastructure Levy can be confusing for clients especially with what can feel like endless forms to fill out, not to mention what the eligibility is and how you can prove exemption!
At ICI Architecture studio we aim to explain this tax in plain English!
Starting with the basics...
So what is CILs?
CILs is a Community Infrastructure Levy that was introduced by the local authorities to support local infrastructure projects, roads, public transport, schools and other vital services. Essentially a tax on people looking to move and live in particular area (paid for by the developer).
It is important to note that if developer hasn't paid the charge the balance will be default due by the land owners.
This tax is calculated based upon a certain geographical area and the size of the floor space within the property. For example in certain scenarios CILs rates have been lower in Towns than in Villages.
Before purchasing a site it is important to check what the CILs rate would be in that area as it varies from county to county to even villages and towns!
At ICI Architecture Studio we have had clients see a difference in rate of over 50% from a distance of 2mins driveaway!
What kind of projects are liable for CIL?
- Any new dwellings or super homes could be liable for CILs tax.
- Any residential extensions comprising of 100sqm of additional floorspace.
How do Local Authorities calculate CILs tax?
As mentioned earlier each location and local authority have different rates which are subject to changes. These are calculated on the net floorspace of a proposed development.
In cases where a property is being demolished the area being demolished can be deducted from the area liable for CILs.
This tax is typically reviewed annually by LA and is outside the scope of VAT.
How is CILs tax paid?
Like any Tax bill due it is important that you make allowances for CILs tax to be paid in full when budgeting for a project as it is up to you to prove exemption.
Payment is due within 60 days of a development starting. It is important that you notify the Local Authority in advance of the start date so they inform you as to when payment must be made.
If you fail to submit the required paperwork and notify them on time they will apply a surcharge (20% of the chargeable amount as an additional surcharge or £2,500 whichever is lower) and the full payment would be due immediately.
Am I eligible for exemption?
In all instances it is best to get in touch with your local council to discuss if your proposed development is liable for CILs or exemption.
There are areas where relief can be applied such as projects for charities, social housing and in some exceptional circumstances.
Other exemptions include self building such as the whole house, residential annex, extension or minor development.
What happens if you don't pay?
CIL payments are mandatory and non-negotiable. If you don't pay CIL or issue the forms on time. You will be subject to a penalty by the local authority this can include additional surcharges, payment instalment options withdrawn, including issuing stop notices and even Prison terms in exceptional cases.