Community Infrastructure Levy information

Introduction to Community Infrastructure Levy (CIL)

In order to raise funds for new infrastructure development, local authorities in the United Kingdom can impose a charge knows as the Community Infrastructure Levy (CIL). CIL can assist in raising funds to support new services, facilities, and infrastructure such as transportation, schools or digital transformation initiatives which are required to maintain new businesses and homes around the Councils. The amount can be used to fund an extensive series of infrastructure needs including better and improved road schemes, health care facilities, leisure centres and park improvements, flood defence etc. Introduced by the Planning Act 2008, the CIL is a development charge tool for local councils in England and Wales to provide infrastructure to support the improvement of their region. Community Infrastructure Levy came into force on 6-Apr-10 via the CIL Regulations 2010. Most new improvements which build net supplementary floor space equal to or greater than 100 square metres, or build a new private house, are, in theory, legally responsible for the levy.

The Localism bill, under David Cameron’s government, had a section on increasing local control of public finance, including a requirement on councils to allocate a proportion of revenue from the Community Infrastructure Levy back to the neighbourhoods where it was raised. Using new authorities presented in the Localism Bill, the Government required charging authorities to assign a significant percentage of levy revenues raised in each area back to that locality. This will make certain that where a locality bears the burden of new developments, it also gets adequate money to manage those effects. It accompaniments the introduction of some different incentives for local authorities that aim to make sure that local areas benefit from the development. Local authorities are expected to work closely with localities to choose what arrangements they need, and balance locality funding with broader infrastructure funding that supports growth. They will maintain the capability to use the levy income, to address the increasing impact on infrastructure that may take place

CIL permits local councils in England and Wales to generate funds from developers undertaking fresh construction projects in their area. The authorities who can charge CIL include the Broads Authority, district and metropolitan district councils, national park authorities, London borough councils, the Mayor of London, and unitary authorities. In Wales, the national park authorities, county borough councils, and county will have the authority to charge the levy. All these bodies make development plans for their respective areas, which are up-to-date by valuation of the infrastructure requirements for which the levy may be collected

Definition of infrastructure

The Planning Act 2008 offers a comprehensive definition of infrastructure which can be funded – this comprises flood defence, transport, hospitals, schools, and other social care amenities. This definition permits the CIL to be used to fund a wide-range of facilities such police stations, parks, play areas, cultural and game facilities, and district heating schemes. This provides local groups the flexibility to select what structure they require to deliver their development plan in the local areas

Benefits of Community Infrastructure Levy (CIL)

According to the United Kingdom Government, this tariff-based methodology makes available the best structure to raise funds for new infrastructure. The Community Infrastructure Levy is unbiased, quicker, and more assured and transparent as compared to the system of planning responsibilities which creates postponement of results due to prolonged discussions and negotiations. Levy rates are decided with local communities’ and developers’ consent – this approach provides developers with much more assurance about how much cash they can except to be contributed

As per the planning obligations’ system, only 6% of entire planning authorisations brought contributions to support the infrastructure cost. On the contrary, CIL creates a rational system, with generating contribution towards supplementary infrastructure that is compulsory for the development

Technology and Community infrastructure levy

Other details

Hertsmere Borough Council was the first authority to introduce the Community Infrastructure Levy (CIL) in Hertfordshire. The Council has charged CIL for new developments approved since Dec-14, resulting in the collection of almost £5.0mn of CIL monies to date. S106 agreements continue to be used to secure financial contributions to fund the delivery of Affordable Housing, where it cannot be provided on or off-site, and for any site-specific or non-financial requirements. Hertsmere Borough Council is inviting expressions of interest from software providers with products which can support the administration and collection of both CIL and s106

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About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.