CIL and existing floorspace: the in-use building test

The Community Infrastructure Levy is charged on net additional floorspace, so existing buildings on your site can reduce the bill, but only if they pass the in-use building test. The CIL existing floorspace deduction is available where a building has been in lawful use for at least six continuous months within the three years ending on the day planning permission first permits the chargeable development. Fail that test and the demolished floorspace counts for nothing, which on a redevelopment of a long-empty building can change the levy by a six figure sum.

Why existing floorspace reduces the chargeable amount

The levy is calculated on the gross internal area of the chargeable development, less the gross internal area of qualifying existing buildings, multiplied by the rate in the charging schedule and indexed.

That subtraction is the whole point of the deduction. Replacing a 400 m² building with a 900 m² one should be charged on 500 m², not on 900 m². The regulations get you there through the definition of the relevant deductible floorspace, and the conditions attached to it are where schemes come unstuck.

Broadly, floorspace in a building that passes the in-use test can be deducted whether it is retained or demolished. Floorspace in a building that fails the test can generally only be deducted where the building is retained as part of the completed development. The practical effect is that empty buildings you intend to knock down are the expensive case.

The lawful use requirement for the deduction

Two words in the test do a lot of work. The use has to be lawful, and it has to be a use.

Lawful means the use was authorised, either by a planning permission, by being immune from enforcement, or by falling outside planning control. An office occupied under a permission for storage is not in lawful use as an office, and evidence of occupation alone does not cure that.

A use also has to be a real use of the building rather than incidental storage of the owner's belongings. Councils differ on how strictly they read this, and the argument usually turns on whether the activity was consistent with the building's authorised use class and whether it was more than nominal.

Where the lawful use is unclear, a certificate of lawfulness for an existing use under section 191 of the Town and Country Planning Act 1990 is the formal route to settle it. That is a separate application, decided on evidence of fact rather than planning merit, and it is worth its fee when a large deduction is at stake.

The continuous occupation period the regulations require

The test is six continuous months of lawful use within the three years ending on the day the permission first permits the chargeable development.

That end date matters more than people expect. For a full permission it is normally the date of grant. For an outline permission it is the date of the last approval that allows development to proceed, which can be the final reserved matters approval or the discharge of a pre-commencement condition. A building that was occupied until two years before the outline was granted may have dropped out of the window by the time reserved matters are approved.

The six months must be continuous. And two separate three month tenancies do not add up. Nor does intermittent use by an owner checking on the property.

Where a building is nearing the end of its window, one option is to secure a genuine lawful occupation before the permission is issued, with a real tenancy, real business rates, real utility accounts and real activity. Arrangements created solely to manufacture the deduction attract scrutiny, and a council that considers the occupation artificial will refuse it.

Measuring gross internal area for the calculation

Gross internal area is measured to the internal face of the enclosing walls, and it includes internal walls and partitions, stairwells, lift shafts, plant rooms, mezzanines with permanent access, and integral garages. It excludes external open areas, open balconies, open canopies and areas below a stated headroom in some conventions.

Errors in this measurement are the most common reason a liability notice is wrong. Prepare your own measured schedule from the survey drawings, floor by floor, and state the convention used. Then compare it with the council's figure line by line rather than as a total.

Basements count where they are enclosed. Voids over double height spaces are counted once. Buildings that have been partly demolished before the application should be measured as they stood at the point the test period ran.

Buildings demolished before permission

Demolishing early is the single most expensive mistake in this area. Three things go wrong at once.

• The building may no longer exist at the date the permission first permits development, which affects whether it can be treated as a relevant building for the deduction.
• The evidence of lawful use becomes harder to assemble once the site is cleared and the tenants have gone.
• The floor areas can no longer be verified from survey, so the council has only its own records to work from.

If demolition has to happen early for safety reasons, record everything first: measured survey with floor by floor areas, dated photographs of every elevation and interior, the building's use history, and the evidence of occupation. Then take advice before the machines arrive.

Evidence councils ask for

Collecting authorities want documents that independently show a real use over a defined period. In practice that means:

1. Business rates records showing the ratepayer, the description and the dates.
2. Utility bills showing consumption rather than standing charges alone.
3. Tenancy agreements or licences, with rent receipts.
4. Council tax records for residential use.
5. Dated photographs, delivery records, staff records or trading accounts.
6. VAT registration or accounts referencing the address.

Two independent sources covering the same six month period is a reasonable target. A single utility bill showing minimal consumption tends to be read as evidence that the building was empty rather than in use.

An illustrative chargeable area calculation

Take a site with a 620 m² gross internal area workshop, occupied under a lawful industrial use until eight months before permission was granted, replaced by a scheme of 1,450 m². The workshop was in lawful use for well over six continuous months inside the three year window, so the chargeable area is 1,450 less 620, giving 830 m². The levy is that figure multiplied by the rate in the adopted charging schedule and then indexed.

Change one fact. If the workshop had stood empty for the whole three years, the deduction is unavailable on demolition and the chargeable area becomes 1,450 m². At any realistic rate, that difference is a material number in the appraisal. This example is illustrative only, and rates come from the charging schedule published by the collecting authority.

Do not confuse this deduction with the vacant building credit, which is a different mechanism relating to affordable housing contributions under national policy rather than to the levy. Where both are in play, an Affordable Housing Statement should deal with the credit and the levy calculation should be handled separately, because the tests and the evidence differ.

Levy exposure belongs in the appraisal from day one, and where a scheme is marginal it feeds straight into a Viability Assessment. Get the deduction question answered before you commit to a purchase price.

This is general guidance, not legal advice, and charging schedules and relief procedures differ between authorities, so check the current schedule and the position with your collecting authority 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.

Browse the report types on PlanScope if you are building the evidence base for a redevelopment site.