An illustrative community infrastructure levy calculation

Community Infrastructure Levy liability is calculated by multiplying the net additional chargeable floorspace by the rate in the council's charging schedule for that zone and use, then applying the indexation figure for the year in which planning permission was granted. The published rate is never the amount you pay, because indexation has applied every year since the schedule was adopted. A CIL calculation worked example is therefore mostly an exercise in getting the measurement and the deductions right, and then letting the council's arithmetic do the rest.

Self-builders usually pay nothing, provided the right form is submitted before work starts. Miss the form and the full charge applies with no discretion.

What the levy charges and on what measure

The levy is charged on net additional gross internal area created by development, measured in square metres, under the Community Infrastructure Levy Regulations 2010 as amended.

Gross internal area is measured to the internal face of the external walls and includes almost everything inside that line: internal walls, stairwells, integral garages, plant rooms and circulation. It is not the same as net internal area or net sales area, and using a sales figure understates the liability in a way the council will correct.

Development becomes liable where it creates 100 m² or more of new floorspace, or where it creates one or more new dwellings regardless of size. So a 40 m² annexe that counts as a separate dwelling is liable and a 90 m² extension to a house is not. Mezzanine floors inserted into an existing building have their own treatment, and buildings into which people do not normally go are excluded.

The levy sits alongside section 106 obligations rather than replacing them, and the two cannot be used to fund the same item. Where affordable housing is involved, the relief interacts with the Affordable Housing Statement and the obligations negotiated with it.

Finding the charging schedule and the rate for your zone

Not every authority charges the levy, so the first check is whether a schedule has been adopted.

Where one has, it will set rates by use and usually by geographical zone, with residential rates commonly differentiated between parts of the district by value. Retail, offices, industrial and other uses often carry a nil or low rate. The schedule is accompanied by a charging zone map, and the zone boundary can run down a street, so take the rate from the map rather than from an assumption about the area.

The documents to find on the council's own site are the adopted charging schedule, the charging zone map, the current indexation or annual rate summary, the instalments policy and the list of relief and exemption forms. Councils also publish an infrastructure funding statement each year showing what has been collected and spent, and that statement is the place to look before arguing about a rate.

Where no schedule exists, the authority may rely on section 106 for contributions instead, and on the Infrastructure Levy powers in the Levelling-up and Regeneration Act 2023 if and when those are brought into force. As at the date of writing the levy regime under the 2010 Regulations is the operative one.

Net chargeable area and what can be deducted

The calculation is about net additional floorspace, so the demolished or retained existing floorspace matters as much as the new.

The deductions available are the gross internal area of buildings that are to be demolished, and the gross internal area of parts of in-use buildings that are to be retained but change use, both subject to the in-use test. Where the deduction applies, the chargeable amount can fall sharply, and on a conversion of a large existing building it can fall to nil.

Measure both states on the same basis and submit the drawings that prove it: existing gross internal area with the measurement line shown, proposed gross internal area on the same convention, and a schedule reconciling the two by floor.

Existing buildings and the in-use test

Here is where most disputes arise. To deduct the floorspace of an existing building, the building must have been in lawful use for a continuous period of at least six months within a defined period ending on the day planning permission first permits development.

Three practical consequences. A long-vacant building usually gives no deduction, which is why a derelict barn or an empty office can generate a large levy bill on conversion. Lawful use means the use was lawful in planning terms, so an unauthorised use does not count. And the evidence burden sits with the applicant, so business rates records, utility bills, tenancy agreements, photographs and staff records are what establish it.

The timing is within the applicant's influence. Where a building is close to meeting the six-month test, the sequence of letting it, using it and then applying can be worth planning deliberately. That is a legitimate course, and it needs real use rather than a paper arrangement.

An illustrative calculation for a single dwelling

This example is illustrative only. The figures are chosen to show the method, not to predict any actual charge, and the real rate, index and deductions must come from the charging authority.

Assume a single new dwelling of 150 m² gross internal area on a plot with no existing building, in a zone where the adopted residential rate is £100 per m², and assume the applicable indexation multiplier for the year of permission is 1.3.

1. Net additional chargeable area: 150 m² minus 0 m² deduction, which is 150 m².
2. Base charge: 150 multiplied by £100, which is £15,000.
3. Indexed charge: £15,000 multiplied by 1.3, which is £19,500.
4. Self-build exemption, if claimed and granted: liability reduced to nil, subject to the clawback conditions.

Change one input and the answer moves a long way. Make the dwelling 90 m² and the base charge falls to £9,000 before indexation. Add a 60 m² in-use building to be demolished and the net area falls to 90 m². That sensitivity is the reason to do the arithmetic at design stage rather than after permission, and to set the levy line in the appraisal alongside the other submission costs covered on the pricing page.

Indexation and why the rate is not the published figure

The levy is index-linked, and the published rate is the rate at adoption, not the rate payable.

The indexation is applied by the charging authority using the index specified in the Regulations, which is based on published building cost information, and the multiplier used is the one for the calendar year in which permission first permits development. Authorities generally publish an annual statement of the indexed rates, and that statement is the document to rely on.

Two points follow. A charging schedule adopted several years ago can produce a figure substantially above the headline rate, so quoting the schedule rate in an appraisal understates the cost. And because the index applies by year of permission, a permission granted in a different year attracts a different multiplier, which can matter where an application straddles a year end.

Exemptions and the forms that go with them

The reliefs are real and the procedure is unforgiving.

For each, the sequence is the same and the order cannot be varied. Assume liability by submitting the assumption of liability form. Claim the exemption on the correct form and obtain the council's written grant of it. Then submit the commencement notice before any work begins. Starting work before the exemption is granted, or without the commencement notice, loses the exemption, and the Regulations give the council no discretion to restore it.

The self-build exemption also carries a clawback period, during which the dwelling must remain the claimant's principal residence and specified evidence must be provided after completion. Selling or letting within that period triggers repayment.

Liability notices, commencement notices and surcharges

The paperwork sequence is where money is lost on otherwise well-run projects.

The council issues a liability notice after permission, stating the chargeable amount and who is liable. Someone must assume liability in writing. The person liable must serve a commencement notice before development begins, and the council then issues a demand notice setting out the payment dates under its instalments policy.

Surcharges apply for failing to assume liability, for failing to submit a commencement notice, for late payment and for a false statement, and interest runs on unpaid amounts. Where no commencement notice was served, the instalments policy can be withdrawn and the whole sum becomes payable immediately. The levy is also a local land charge, so it follows the land.

Diary the dates the moment the liability notice arrives, and keep the forms with the decision notice and the discharge of conditions file. The same pre-submission discipline described in an internal quality check before anything leaves the office applies to the levy paperwork, and the floorspace schedules that support it belong with the Planning Statement.

This is general guidance, not legal advice; the figures above are illustrative and the rates, index and reliefs must be checked against the charging authority's current published schedule before relying on them.