CIL instalment policies and development cash flow
Without an instalment policy the levy is due in full 60 days after work starts. What the policies offer, how phasing helps, and the notices that protect the schedule.
Without an instalment policy, the Community Infrastructure Levy falls due in full 60 days after development starts on site. A CIL instalment policy, adopted and published by the charging authority, replaces that single payment with a schedule tied to the size of the charge, and on a scheme of any scale it is the difference between funding the levy out of the development loan and funding it out of early sales.
The policy is the authority's to set, not yours to negotiate. What you can control is whether you qualify for it, and the commonest way developers lose the benefit is procedural rather than financial.
How an instalment policy works and who sets it
The Community Infrastructure Levy Regulations 2010, as amended, allow a collecting authority to publish an instalment policy setting out how many payments the levy may be paid in, the intervals between them and any threshold below which the full amount is still due in one go.
The policy must be published before it takes effect, and it applies to chargeable developments where the payment falls due after the policy comes into force. An authority can withdraw or replace a policy, and when it does, permissions already carrying a liability notice under the old policy are treated according to the rules in force at the relevant date. So the policy in force when you start on site is the one that governs your payments, not the one in force when permission was granted.
A typical structure charges the whole amount within 60 days below a stated threshold, then splits larger amounts into two or three payments over 12 to 24 months. The thresholds and periods vary between authorities, and there is no national default beyond the 60-day rule.
Reading the authority's published policy
Read the policy itself rather than a summary, and look for five things.
- The threshold below which no instalments are offered, which is where small schemes sit.
- The number of instalments and the days after the start of works at which each falls due.
- Whether the first instalment is a percentage or a fixed sum.
- Whether the policy disapplies instalments for phased permissions, which some do.
- The circumstances in which the right to pay by instalments is lost.
That last point is the one worth printing out. In almost every policy, failure to assume liability before starting, or failure to submit the notice telling the authority that work is about to start, removes the instalment right and makes the whole sum payable at once.
Phased permissions and separate liability by phase
Where a planning permission is phased, each phase is treated as a separate chargeable development. That means a separate liability notice, a separate assumption of liability, a separate notice of the start of works and a separate instalment schedule for each phase.
This matters for cash flow on a large site, because the levy on phase three is not triggered until phase three begins. But it only works if the permission itself defines the phases. An outline permission that refers vaguely to phasing, or a full permission with no phasing at all, will not deliver phase-by-phase liability, and by then it is too late to fix without a section 73 application.
Define the phases on a drawing, refer to that drawing in the permission, and make sure the reserved matters and the conditions follow the same phase numbering.
What happens on default
The consequences escalate, and they are set out in the regulations rather than left to the authority's discretion.
| Failure | Consequence |
|---|---|
| No assumption of liability before works start | Surcharge, and liability falls on the landowner by default |
| No notice of the start of works | Surcharge, and the right to pay by instalments is lost |
| Late payment | Interest and late payment surcharges on the outstanding amount |
| Continued non-payment | CIL stop notice, liability order, and recovery action against the land |
The surcharge for failing to notify the authority before starting on site is capped, but the loss of the instalment right is not capped, and on a large scheme that is the expensive part. A single missed form can convert a three-year payment schedule into a demand payable within days.
Relief is worse. Self-build exemption, residential annexe and extension exemption, social housing relief and charitable relief all have to be claimed, granted and followed by a notice of the start of works before any work begins. Start first and the relief is lost outright, with no discretion to restore it. Self-builders have lost five-figure exemptions this way on a single day's groundworks.
Interest and surcharges
Late payment interest runs at a margin above the Bank of England base rate, and late payment surcharges apply in steps as the debt ages. Because the base rate moves, model the interest against the current rate rather than a historic figure, and check the regulations for the margin in force.
Two points matter for the appraisal. Interest on late CIL is not a financing cost you can argue down, and it is not relievable on viability grounds. The levy is non-negotiable once the chargeable amount is set, and a viability assessment cannot reduce it the way it can influence a section 106 package, unless the authority has adopted an exceptional circumstances relief policy.
Transfer of liability between parties
Liability can be assumed by anyone, and it can be transferred to another party at any time before the final payment falls due, using the prescribed forms. Contractors sometimes assume liability as part of a development agreement, and purchasers of serviced plots frequently do.
Two cautions. If nobody assumes liability, it sits with the owners of the land at the point the levy falls due, apportioned between them, and the authority does not have to chase the developer first. And a transfer after the payment is already overdue does not wipe the surcharges already incurred.
Where a site is sold between permission and the start of works, put the CIL position in the sale contract explicitly: who has assumed liability, which notices have been served, whether relief has been claimed and what the instalment schedule looks like.
Building the levy into the development appraisal
Model CIL as a hard, dated outflow rather than a contingency. Three inputs set it: the chargeable floorspace after any deduction for existing lawful floorspace in use, the rate in the charging schedule for that use and that zone, and the index figure applied at the relevant date.
Indexation is the part people forget. Charging schedules are indexed annually against a published construction cost index, so a rate set when the schedule was adopted will have moved by the time permission is granted. Check the current schedule and the current index figure rather than using the adopted rate.
An illustrative example: a scheme with a chargeable amount of £480,000 in an authority whose policy offers three instalments at 25 per cent after 60 days, 37.5 per cent after 12 months and 37.5 per cent after 24 months. Submitting the assumption of liability and the notice of the start of works correctly means £120,000 in the first cash flow period. Failing to serve the notice means the full £480,000 within days, plus a surcharge. Same scheme, same levy, four times the early cash requirement. This example is illustrative rather than a real case.
Where contributions are also being sought through a planning obligation, model both together. The authority's published record of what it has collected and spent gives useful context, and infrastructure funding statements explained covers how to read one. On smaller schemes the obligations are usually narrower, and open space and play space contributions on small schemes sets out the common heads of terms. Student schemes have their own contribution pattern, described in student accommodation planning contributions.
Put the form dates in the programme alongside the construction dates. That is the single change that prevents most CIL problems.
You can browse the 66 PlanScope report types by category to see which supporting documents a major application needs.
This is general guidance, not legal advice. Check the position with your charging authority or a qualified professional before relying on it.
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Frequently asked questions
When is CIL payable if there is no instalment policy?
The full chargeable amount falls due 60 days after development starts on site. That is the default position in the Community Infrastructure Levy Regulations 2010, and it applies wherever the collecting authority has not adopted and published an instalment policy, or where the chargeable amount sits below the threshold at which the policy offers instalments.
Can I negotiate the CIL amount?
No. The chargeable amount follows from the adopted charging schedule, the chargeable floorspace and the index figure, and it is a calculation rather than a negotiation. Viability evidence does not reduce it, unlike a section 106 package. The only routes to a lower figure are deducting existing lawful floorspace in use and claiming a relief or exemption you qualify for.
What happens if I forget the notice before starting work?
You lose the right to pay by instalments, so the whole chargeable amount becomes payable immediately, and a surcharge is added. If you had been granted a relief or exemption such as self-build, it is lost altogether with no discretion to restore it. Serve the notice before any work begins, including site clearance and groundworks.
Does phasing a permission reduce CIL?
It does not reduce the total, but it spreads it. Each phase of a phased permission is a separate chargeable development with its own liability notice, its own notice of the start of works and its own instalment schedule, so later phases are not triggered until they begin. The permission itself has to define the phases for this to work.
Are CIL rates the same year to year?
No. Charging schedules are indexed annually against a published construction cost index, so the rate applied to your permission will usually differ from the rate printed in the adopted schedule. Check the authority's current schedule and the index figure for the relevant year rather than working from the figure at adoption.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.