The Infrastructure Levy powers in the 2023 Act explained
The 2023 Act creates a value-based levy through regulations that carry almost all the detail. What the framework enables, what changes for appraisals, and what to check.
The Levelling-up and Regeneration Act 2023 inserted a new Part into the Town and Country Planning Act 1990 creating powers for an Infrastructure Levy in England. Infrastructure levy explained in one sentence: it is a charge on the value of development, set locally, intended to be mandatory for charging authorities and to take over much of the work currently done by the Community Infrastructure Levy and by section 106 agreements. The Act is a framework. Almost everything that determines how it works in practice sits in regulations made under it.
As at 24 September 2026, the position on bringing those powers into force has moved more than once, so verify the current status before relying on anything below.
What the Act enables
The Act received Royal Assent on 26 October 2023. Its levy provisions create the power for a charging authority to charge a levy in respect of development in its area, set out who is liable, how liability arises and is recovered, and what the receipts may be spent on.
Four design features are written into the framework rather than left to regulations:
- The charge is calculated by reference to the value of the development rather than its floorspace alone.
- Charging is intended to be a duty on charging authorities rather than a discretion.
- Receipts are applied to infrastructure and, subject to the detail, to affordable housing.
- A charging schedule is prepared locally and subjected to examination before it takes effect.
What the framework does not do is set a rate, a threshold, an exemption list or a payment timetable. Those are regulation matters, and until the regulations are in force for a given authority the existing system continues to apply there.
How the levy differs from the community infrastructure levy
The Community Infrastructure Levy Regulations 2010 charge a rate per square metre of new floorspace, indexed annually, set by an optional charging schedule. The differences under the new framework are structural rather than cosmetic.
| Feature | Community Infrastructure Levy | Infrastructure Levy framework |
|---|---|---|
| Basis of charge | Floorspace, rate per square metre | Value of the development |
| Adoption by authority | Optional | Intended to be mandatory |
| Relationship to viability | Fixed rate, tested at schedule stage | Value-based, so responds to scheme value |
| Affordable housing | Largely outside, delivered through section 106 | Intended to be capable of delivery through the levy |
| Payment trigger | Largely when development starts | Intended to shift towards later in the build |
The shift from floorspace to value is the one that changes appraisals. A floorspace charge is known at the point the scheme is designed. A value-based charge depends on what the completed development is worth, which introduces a figure that is not fixed at the point of decision and which the authority and the developer may see differently.
The shift in payment trigger matters for cash flow. Paying when development starts means funding the charge before any revenue arrives. Paying later, against completions, changes the finance requirement on a phased scheme substantially.
The effect on section 106 obligations
Section 106 of the 1990 Act is not repealed, and the framework does not remove it. What it does is narrow the role obligations are expected to play.
The intention set out around the Act is that the levy carries the general infrastructure burden, while section 106 continues to deal with matters that are site specific and cannot sensibly be dealt with through a charge: access works, on-site open space, ecological management, restrictions on use and phasing. There is also provision for authorities to secure affordable housing in kind rather than as a cash receipt, which is the mechanism intended to preserve on-site delivery.
For anyone drafting now, three practical points hold whether or not the new powers are yet in force.
- The statutory tests for obligations in regulation 122 of the Community Infrastructure Levy Regulations 2010 continue to apply to section 106 agreements. Necessary, directly related, and fairly and reasonably related in scale and kind.
- Agreements being negotiated today should anticipate a possible transition, including how a levy liability would interact with contributions already secured.
- Affordable housing obligations remain the most heavily negotiated element, and an Affordable Housing Statement still has to explain tenure mix, delivery and any viability case.
Charging schedules and rate setting
A charging authority prepares a schedule, publishes evidence, consults, and submits it for examination. That process is familiar from the existing levy and from local plan making, and the same pressure points apply.
Rate setting under a value-based charge requires the authority to form a view about development value across different types of scheme and different parts of its area. Expect differentiated rates by use and by zone, and expect the evidence base to be contested at examination by developers and landowners who take a different view of values and costs.
The examination is the point of influence. An authority that sets rates on optimistic value assumptions produces a schedule that stalls delivery, and the place to demonstrate that is with evidence during the consultation and examination rather than through individual negotiation afterwards. That is the same discipline as engaging with a local plan viability evidence base, and a Viability Assessment prepared for a specific site does not substitute for it.
Transitional and test authority arrangements
Government signalled that the levy would be introduced through a phased approach, with a limited number of authorities operating it first and the wider rollout following. That approach means a period, potentially a long one, in which different authorities in the same region operate different systems.
For a developer working across authority boundaries, that is a practical problem rather than a theoretical one. Two sites 20 miles apart could face a floorspace charge in one district and a value-based charge in the next, with different payment triggers and different treatment of affordable housing.
Transitional provisions determine which scheme applies to a permission granted before a schedule takes effect, and those provisions are in regulations. Check them for each authority rather than assuming a common position.
Note: the planning law timeline at planning law updates is a place to follow how reform is progressing, and the wider reform picture including the treatment of grey belt land is moving on a similar timetable.
What to assume in an appraisal
Appraising a site today against a levy that may not apply to it is a judgement call. A workable approach is to appraise the known position and sensitivity test the unknown one.
Run the base appraisal on the system currently in force in that authority, with the adopted charging schedule and the obligations the authority's policies indicate. Then run a sensitivity showing the effect of a value-based charge at a range of percentages, and a second sensitivity on the payment trigger, because the timing change affects the finance cost even where the total is similar.
Be careful with land pricing. A charge on value behaves differently from a charge on floorspace when values move, and a land bid struck on the assumption that the charge is fixed can be badly wrong if the basis changes before implementation. Where a promotion or option agreement runs for several years, the drafting should address which regime the planning costs are assessed under.
Verifying the current position
Do not rely on a summary, including this one, for a live transaction. Three checks, in order.
Read the current text of the relevant Part of the Town and Country Planning Act 1990 on the legislation website, noting which provisions are shown as in force and which are not. Provisions are brought into force by statutory instrument, and the site records each one.
Check whether regulations have been made, and read them rather than the consultation that preceded them. Consultation proposals change.
Then check the specific authority. Whether it has a levy charging schedule, whether it retains a Community Infrastructure Levy schedule, and what its current planning obligations policy says. That information sits on the authority's own website and it is the only source that tells you what applies to your site.
Where the scheme is being costed now, set the assumption out explicitly in the Planning Statement and in the appraisal, with the date it was checked. An assumption that is recorded and dated can be revisited. One that is buried in a spreadsheet cannot.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional 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.
Frequently asked questions
Has the Infrastructure Levy replaced the Community Infrastructure Levy?
The Levelling-up and Regeneration Act 2023 creates the powers, but the operative detail sits in regulations and the date they take effect has moved more than once. Until regulations are in force for a given charging authority, the existing Community Infrastructure Levy and section 106 arrangements continue to apply there. Check the legislation website and the authority's own pages for the current position.
How is the levy calculated?
The framework calculates the charge by reference to the value of the development rather than floorspace alone, with rates set locally in a charging schedule that is examined before it takes effect. That differs from the Community Infrastructure Levy, which charges a rate per square metre of new floorspace. The thresholds, rates and exemptions come from regulations and the local schedule.
Does section 106 disappear?
No. Section 106 of the Town and Country Planning Act 1990 remains, and the intention is that obligations continue to deal with site-specific matters such as access works, on-site open space, ecological management and phasing. The statutory tests in regulation 122 of the Community Infrastructure Levy Regulations 2010 continue to apply to obligations being negotiated now.
How would affordable housing be delivered under the levy?
The framework is intended to allow authorities to require affordable housing in kind rather than taking a cash receipt, preserving on-site delivery. The detail of how that operates, including how the value of homes provided is set against the levy liability, sits in regulations. Affordable housing remains the most negotiated element of any scheme.
What should I assume when appraising a site now?
Appraise on the system currently in force in that authority, using its adopted charging schedule and obligations policy. Then run sensitivities on a value-based charge across a range of percentages and on a later payment trigger, since the timing change affects finance cost. Record the assumption and the date it was checked rather than burying it in a spreadsheet.
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.