Charitable relief from the Community Infrastructure Levy

CIL charitable relief comes in two forms, and the difference between them decides whether you have a right or a hope. Mandatory relief is available across England wherever the tests in the Community Infrastructure Levy Regulations 2010 are met. Discretionary relief exists only where the charging authority has published a decision to offer it, and many authorities have not.

Both are lost by the same mistake. Relief has to be claimed, granted and in place before development begins, and a charity that starts on site while the paperwork is pending pays the levy in full.

Mandatory relief and the three tests

Mandatory charitable relief applies where three things hold at the same time. The claimant is a charitable institution. The claimant owns a material interest in the land. And the chargeable development will be used wholly or mainly for charitable purposes of that institution, whether on its own or with other charities.

Material interest means a freehold or a leasehold with at least seven years to run at the time permission first permits development. A charity occupying under a short lease or a licence does not hold one, which catches organisations that raise the money for a building they will never own.

Relief is calculated on the part of the development that meets the test. A scheme with a charitable hall and three flats for open market sale gets relief on the hall, not on the flats, and the apportionment has to be set out in the claim rather than asserted.

There is an exclusion where granting relief would amount to a subsidy that is not permitted, which in practice bites on trading activity rather than on ordinary charitable use.

Using the building for charitable purposes

The phrase to focus on is wholly or mainly. It is a test of use, not of ownership or of where the money goes.

A day centre run by the charity for its beneficiaries is charitable use. A café inside that day centre, open to the public and run to generate surplus, is harder, and authorities look at the floor area and the pattern of activity rather than at the stated intention.

Mixed schemes need care at design stage. If a charity wants relief on the whole building, the ancillary commercial element has to be ancillary in both scale and function. Splitting the chargeable development into phases with different uses sometimes gives a cleaner answer than arguing about proportions inside one building.

Keep the evidence. Room schedules, a floor area breakdown by use, the charity's objects and a short note on how each space serves those objects will answer most of what the levy officer asks.

Discretionary relief and whether the authority offers it

Discretionary charitable relief covers the case where the building will be held as an investment and the profits applied to the charity's purposes. A charity that develops offices to let, and spends the rent on its work, is the standard example.

This relief is available only where the charging authority has published a decision to make it available, and that decision can be withdrawn. Check the authority's published levy documents before assuming it exists, and check the date, because these decisions get reviewed alongside the charging schedule.

Where the authority does offer it, the claim is made in the same way as a mandatory claim and on the same timetable. Treat it as a discretionary decision that needs persuading, with the investment structure, the flow of profits and the charity's accounts set out plainly.

Subsidy control limits

Discretionary relief is subject to subsidy control limits, because relieving a charity of a liability that its commercial competitors pay is a financial advantage.

The practical effect is a ceiling on the value of relief that can be granted over a rolling period, and a requirement for the authority to record what it has granted. Where a charity has received other public support, the ceiling can be reached by the time the levy claim is made.

Ask the authority early what headroom is available. It is a question they can answer, and the answer changes the development appraisal. Where relief is capped, the shortfall belongs in the Viability Assessment that supports the scheme rather than appearing as a surprise after the decision notice.

Claiming before development begins

The sequence is unforgiving and it runs in this order.

1. Assume liability for the levy in writing, using the prescribed form.
2. Submit the charitable relief claim to the collecting authority with the evidence of charitable status, the interest in land and the intended use.
3. Wait for the authority to notify its decision in writing.
4. Serve the commencement notice, giving the date development will start.
5. Start work only after the relief has been granted and the notice served.

If development begins before the authority has notified its decision, the claim lapses. The same applies where a commencement notice is not served, which also triggers a surcharge, and the interaction between the two is set out in more detail in our note on the commencement notice surcharge.

Demolition can constitute commencement of the chargeable development where it forms part of the permitted scheme. Charities doing enabling works while the claim sits with the council lose relief this way more often than they lose it on eligibility.

Clawback when the use changes

Relief is not final at grant. A disqualifying event within seven years of commencement causes the relief to be withdrawn, and the levy becomes payable.

Disqualifying events include the development ceasing to qualify as one used wholly or mainly for charitable purposes, and the claimant ceasing to be eligible. Selling the building, converting the charitable space to commercial letting, or a merger that moves the asset into a non-charitable entity can all trigger it.

The charity has a duty to notify the collecting authority when a disqualifying event occurs, and failing to notify attracts a surcharge on top of the reinstated liability.

Trustees should diarise the seven year point and treat any proposed change of use inside that window as a levy question before it becomes a property question. Relief withdrawn at year five on a building whose funding closed at year one is a serious problem for a small organisation.

Village halls, places of worship and community buildings

Community buildings often qualify for mandatory relief without difficulty, provided the operator is a charitable institution holding a material interest. Village hall trusts, church councils and scout groups usually meet that description, and their buildings are used wholly or mainly for the charity's purposes.

Two traps recur. The first is the unincorporated committee that has no registered charitable status and no material interest, which fails two of the three tests at once. The second is the hall that is hired out commercially for a substantial part of the week, where the levy officer asks whether the main use is still charitable.

Where relief is not available, check the other routes before accepting the bill. Some works are not chargeable development at all, and structures that people do not normally go into are outside the levy. The residential extension exemption works on entirely different rules and applies to a different set of buildings.

Browse all 66 report types if you are assembling an application for a community building and want to see which supporting documents the council is likely to ask for.

This is general guidance rather than legal advice. Check the position with your collecting authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.