Community Infrastructure Levy or a section 106 obligation
The levy is calculated from an adopted schedule and lost through missed notices. Section 106 obligations are negotiated against three statutory tests. How to budget for both on the same scheme.
The Community Infrastructure Levy is a charge calculated from a published schedule and paid because the development happens. A section 106 obligation is a negotiated agreement that makes a particular development acceptable. The cil vs section 106 comparison matters at appraisal stage, because one is predictable from a spreadsheet and the other is not, and a scheme can carry both.
The failure mode is different for each. Levy liability is lost through paperwork. Obligations are lost through negotiation.
What each mechanism can lawfully fund
The levy funds infrastructure identified by the charging authority, and the authority has discretion over what it spends the money on within the scope the regulations allow. A proportion goes to the parish or neighbourhood in which the development takes place. The payer has no say in where it goes.
A section 106 obligation secures things specific to the development: affordable housing, on-site open space and its management, a highway contribution tied to a junction the scheme affects, a travel plan, a restriction on occupation until something is delivered, or the transfer of land.
The distinction that follows is useful. Levy money pays for general infrastructure in the area. Obligations deal with what this development needs before it can be acceptable.
The statutory tests for an obligation
An obligation may only be taken into account in granting permission where it meets three tests set out in the levy regulations. It must be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it.
Those tests are legal requirements rather than guidance, and they are the basis on which a negotiated package can be resisted. A request for a contribution towards a facility the development does not affect fails the first and second tests. A contribution calculated as a round sum with no methodology behind it struggles on the third.
Ask for the authority's evidence base. Where a contribution derives from a supplementary planning document with a published formula, the calculation can be checked. Where it does not, ask how the figure was arrived at.
How levy liability is calculated
Liability is charged on net additional floorspace in the development, at the rate in the authority's adopted charging schedule for that use and that part of the district, and indexed to the year of the permission. Existing buildings in lawful use for the required period can be deducted, which is why demolition and reuse schemes need careful measurement.
Three practical points:
- Measure gross internal area consistently and show the calculation, because an authority that disagrees will issue a liability notice based on its own figure.
- The indexation means the charge in the schedule is a base figure rather than the amount payable.
- Charging schedules are examined and adopted like a plan, and they are revised, so check the current version rather than the one that applied on a previous scheme.
Some authorities charge nothing on some or all uses, either because viability did not support a charge or because they have chosen not to adopt a schedule at all. Check before assuming a liability exists.
Exemptions, reliefs and the forms
The reliefs available include exemptions for self-build housing, for residential extensions and annexes, relief for social housing and relief for charitable development. Minor development below the floorspace threshold is not liable.
Every one of them depends on procedure. The general pattern is that liability must be assumed, the relief or exemption claimed and granted in writing, and the statutory notice of the date development will start served before any work begins. Miss that notice and the exemption can be lost entirely, with a surcharge added and the full sum payable immediately.
That is the most common way a self-builder ends up with an unexpected five figure bill on a house they are building for themselves. The forms have to go in the right order and the last of them has to reach the authority before a spade goes in the ground. The sequence of notices and who sends what is set out in the guide to which CIL form to send and when, and it is worth reading before the ground is broken rather than afterwards.
Timing across the two
The two mechanisms bite at different moments.
| Stage | Levy | Section 106 |
|---|---|---|
| Before decision | No action | Agreement negotiated and completed |
| At grant | Liability notice issued | Obligation binds the land |
| Before works start | Assumption of liability and start notice | Pre-occupation triggers begin to run |
| During build | Demand notice, payment by instalments where a policy exists | Contributions paid at agreed triggers |
| On sale | Liability passes with the land | Obligation runs with the land |
A section 106 agreement has to be completed before the decision notice is issued, which is why so many applications sit at committee resolution stage for months. Levy liability, by contrast, arrives automatically with the permission and needs managing afterwards.
Avoiding double counting
An authority cannot use both mechanisms to fund the same item of infrastructure. Where the levy is charged towards a category of infrastructure, an obligation seeking a contribution to the same thing fails the necessity test.
Authorities publish annual infrastructure funding statements setting out what they have collected and what they have spent it on. That document is the evidence to cite where a requested contribution looks like it duplicates levy funded provision.
Affordable housing sits outside the levy and is secured by obligation, so an Affordable Housing Statement is part of the pack on schemes above the local threshold. Where the combination of levy, obligations and policy requirements makes a scheme unviable, the route is a Viability Assessment prepared to the professional standard councils expect, and viability work of that kind is normally reviewed by the authority's own consultant.
Budgeting both on a scheme
Do the levy calculation at appraisal, from the current schedule and the current index, and treat it as a fixed cost. Then build a separate line for obligations, informed by the authority's published formulas and by recent agreements on comparable schemes in the same district, and hold a contingency because the package is negotiated.
And diarise the notices. The levy is the only part of the planning system where a missed form costs more than a missed deadline.
To see which supporting documents your scheme is likely to need, browse the report types on PlanScope, or enter your postcode to work from the site.
PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it.
Frequently asked questions
What is the difference between CIL and section 106?
The levy is a charge calculated from the authority's adopted schedule on net additional floorspace, funding general infrastructure at the authority's discretion. A section 106 obligation is a negotiated agreement securing what a particular development needs to be acceptable, such as affordable housing, open space management or a junction contribution.
What are the tests for a section 106 obligation?
An obligation may only be taken into account in granting permission where it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it. Those are legal requirements, so an unevidenced round sum contribution can be resisted.
How is levy liability calculated?
On net additional floorspace, at the rate in the adopted charging schedule for that use and area, indexed to the year of the permission. Existing buildings in lawful use for the required period can be deducted. Measure gross internal area consistently and show the calculation, because the authority will otherwise issue a notice on its own figure.
How do people lose the self-build exemption?
By starting work before the paperwork is complete. Liability has to be assumed, the exemption claimed and granted in writing, and the statutory notice of the start date served before any work begins. Missing that notice can remove the exemption entirely, with a surcharge added and the full sum payable immediately.
Can a council charge the levy and a contribution for the same thing?
No. Where the levy funds a category of infrastructure, an obligation seeking a contribution to the same item fails the necessity test. Authorities publish annual infrastructure funding statements recording what has been collected and spent, and that document is the evidence to cite when a request looks like duplication.
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.