CIL indexation and the figure that applies to your scheme

The levy rate in your charging schedule is not the rate you pay. Rates are set in pounds per square metre at the date the schedule took effect, then indexed forward, and the figure applied to your scheme is fixed by the year of the permission rather than by the year you start on site. A scheme permitted in one calendar year and started three years later is charged on the earlier year's index. Get the index year wrong in an appraisal and the error compounds across every square metre of chargeable floorspace.

The arithmetic sits in Schedule 1 to the Community Infrastructure Levy Regulations 2010, as amended. It is mechanical, and that is the point: there is no negotiation and no viability discretion once the schedule is adopted.

How a charging schedule rate is indexed

A charging authority adopts rates expressed in pounds per square metre, with a stated date from which the schedule takes effect. Those rates are then uprated by an inflation index so that the real value of the charge holds as construction costs move.

Since the 2019 amendments, the index used is an annual index published by the Royal Institution of Chartered Surveyors for levy purposes. It is published in the autumn and applies from 1 January of the following year, so there is a predictable annual step. Before that change, indexation ran off a tender price index with different timing, which matters if you are checking an old liability notice on a long-running scheme.

The calculation in Schedule 1 multiplies the rate by the chargeable area and then by the ratio of two index figures: the index for the year relevant to the permission, divided by the index for the year in which the charging schedule took effect. A schedule adopted some years ago on a low index therefore produces a materially higher charge today, even though the published rate has not changed.

Two practical points. The index ratio applies to each rate separately where a schedule has different rates by use or by zone. And the chargeable area is net additional floorspace, so existing buildings in lawful use that are demolished or converted can be deducted where the regulations allow it.

The date that fixes the rate for a permission

This is where appraisals go wrong. The relevant index year follows the permission, not the start on site and not the date you assumed liability.

For a full permission the position is straightforward: the year the permission was granted supplies the index figure. For an outline permission with reserved matters, and for a permission granted in phases, the regulations work from the day the permission first permits development, which can be later than the grant of the outline consent and can differ between phases. Each phase of a phased permission is treated as a separate chargeable development with its own liability.

A section 73 permission creates its own complications, because it is a new permission and the regulations contain specific provisions for calculating the levy where an earlier permission has already been charged. If you are varying a condition on a charged scheme, ask the collecting authority how it will recalculate before you apply, since the answer affects whether the variation is worth making.

The honest uncertainty here is that collecting authorities do not always apply the phasing provisions the same way, particularly on older permissions. Ask for the calculation in writing and check it against the regulations rather than accepting the figure on the notice.

Liability notices and demand notices

The collecting authority issues a liability notice as soon as practicable after the day the permission first permits development. It states the chargeable amount and the assumptions behind it. Read it on arrival rather than filing it.

Someone then has to assume liability, using the prescribed form. If nobody does, liability defaults to the landowner and surcharges become available to the authority. Where the land is being sold, liability can be transferred, but the transfer has to be done properly and before the relevant date.

Before starting work you must submit a commencement notice, and it has to reach the authority before development begins. The demand notice, which sets out what is due and when, follows commencement. Missing the commencement notice is the single most expensive administrative error in the regime: it can cost you the right to pay by instalments, exposes the whole amount immediately, and triggers a surcharge. Diarise it alongside the other things that have to happen before a start, as our note on discharging pre-start conditions in time for a spring start sets out.

Keep the sequence in one place: liability notice received, liability assumed, exemptions claimed and granted, commencement notice submitted, then start.

Instalment policies and their trigger dates

Most charging authorities adopt an instalment policy, and the terms vary widely. Typical structures tie payments to a number of days from commencement, with the number of instalments increasing with the size of the charge.

Three things to establish from the published policy before you programme the build. The trigger date for each instalment, which is usually counted in days from the date of commencement rather than from a calendar date. The minimum charge at which instalments become available, since small liabilities are often payable in a single sum. And the consequence of a late payment, which is commonly loss of the instalment entitlement for the remaining balance plus interest.

Instalment policies can be amended by the authority, and the policy in force on the day of commencement is the one that applies. If a scheme is likely to start near the end of a financial year, check whether a revised policy is in the pipeline. Payment timing interacts with obligations under a section 106 agreement too, and those triggers often fall in a different pattern, which is covered in our note on section 106 payment triggers and the financial year.

Exemptions, relief and the deadlines attached

Relief and exemptions are available for social housing, charitable development, self-build housing, residential annexes and residential extensions, and in some areas for exceptional circumstances where the authority has made that available.

Every one of them has to be claimed on the prescribed form and granted by the authority before development starts. There is no retrospective route. The self-build exemption carries a further obligation: the dwelling must be occupied as the applicant's sole or main residence for three years from completion, and supporting evidence has to be submitted within six months of completion. Miss that window and the exemption is withdrawn with the full charge becoming payable.

The residential extension exemption is the one householders trip over, because the extension may be below the floorspace threshold at which the levy applies at all, and people claim an exemption they did not need while forgetting the commencement notice that they did.

Where relief is granted, a disqualifying event within the clawback period can reverse it. Sale of a self-build dwelling inside three years is the obvious one.

Checking the current index figure

The index is published annually and the charging authority should state the figures it used on the liability notice. Where it does not, ask.

To check a calculation yourself you need four things: the rate from the adopted charging schedule for the relevant use and zone, the chargeable area as net additional floorspace, the index figure for the year relevant to your permission, and the index figure for the year the schedule took effect. Multiply, then compare with the notice. Discrepancies most often come from the chargeable area rather than the index, and in particular from whether a deduction for existing lawful floorspace was allowed.

Where you disagree, there is a review and appeal process with defined time limits running from the liability notice, so act quickly rather than entering a correspondence.

Modelling the levy across a phased scheme

On a phased permission, build the model phase by phase with the index year stated for each. Then stress test it.

Illustrative example: a scheme with three phases, where phase one is permitted and started in the first year, and phases two and three follow as reserved matters approvals in later years. If the phasing provisions fix a later index year for the later phases, those phases carry a higher charge per square metre than phase one at the same published rate. Modelling all three at the phase one figure understates the liability. These figures are illustrative and the mechanism needs checking against the regulations and the authority's calculation for your own scheme.

Programme the exemption and notice deadlines into the same model, because they are date-driven and unforgiving. Survey work that has to happen before a start adds its own calendar constraints, particularly where seasonal ecology windows apply, and spreading that spend across financial years is covered in phasing a survey budget across two financial years.

Browse the 66 report types by category to scope the evidence base alongside the levy model, and enter your postcode on PlanScope to start a draft.

This is general guidance, not legal advice. Levy rates, instalment policies and index figures change, so check the current charging schedule and the position with the collecting authority or a qualified professional before relying on it.

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