The Infrastructure Levy: what is enacted and what is not

The infrastructure levy status is straightforward to state and easy to get wrong. The Levelling-up and Regeneration Act 2023 contains the powers to create an Infrastructure Levy in England. Those powers have not been brought into force through the regulations they depend on, and ministers have indicated they do not intend to implement the levy in the form the Act designed. So the Community Infrastructure Levy and section 106 obligations continue to operate exactly as before.

As at the date of writing, that is the position. It is a policy area that moves, and anyone relying on it should check the current status on legislation.gov.uk and the government's own publications rather than on a secondary summary, including this one.

The powers taken in the 2023 Act

The Act creates a framework rather than a working charge. The levy it describes would be set locally by charging authorities, calculated as a percentage of the gross development value of a development above a minimum threshold, and collected largely on or after completion rather than at implementation.

Three features distinguished it from the existing levy. It would be mandatory for charging authorities rather than optional. It would be calculated on final value rather than on floorspace, which shifts risk between the authority and the developer. And it carried a "right to require" mechanism intended to let authorities take affordable housing in kind as part of the levy payment rather than through a separate obligation.

Charging authorities would prepare a charging schedule subject to examination, and an infrastructure delivery strategy setting out how receipts would be spent.

None of that operates without regulations. The Act itself provides the architecture and leaves the numbers, the exemptions, the collection mechanics and the transition to secondary legislation.

What the levy was intended to replace

The stated aim was to capture more land value, more simply, and to reduce the negotiation that surrounds section 106 agreements.

Under the design, the levy would have absorbed most of what section 106 currently delivers, including affordable housing on many sites, with obligations retained for site-specific matters that a standard charge cannot handle: access works, on-site open space, restrictions on use, and the mitigation of a specific harm caused by a specific development.

The existing levy would have been wound down, although the Mayoral Community Infrastructure Levy in London and levies in Wales were treated differently, and the transition was always going to run over years rather than months.

Whether the design would have delivered more value capture was contested throughout consultation. The mechanical criticism was the shift to gross development value: a percentage of an uncertain future number is harder to plan against than a rate per square metre, and it pushes the cash flow to the end of a scheme when the authority most needs it at the start.

Why implementation has not followed enactment

Three reasons, in descending order of weight.

The technical design was not settled. The government consulted on it during 2023 and the responses identified unresolved questions about valuation at completion, the treatment of phased schemes, the interaction with viability, and what happens where the levy yields less than the affordable housing a section 106 would have secured.

The delivery burden on local authorities is substantial. Every charging authority would need a schedule, an examination, valuation capacity and a collection function, which is a demanding ask of planning departments already short of staff.

And the policy direction changed. Ministers have since indicated a preference for improving the existing section 106 and levy regime rather than replacing it, which removes the impetus for the regulations the Act requires.

The practical lesson for anyone reading legislation is that a provision on the statute book is not a provision in force. Check whether it is in force, not the Royal Assent date.

How the levy would interact with section 106

Had it been implemented, the interaction would have been the hardest part, and understanding the intended design is still useful because it shows what a future reform would have to solve.

Obligations would have been narrowed rather than abolished. Affordable housing would have moved substantially into the levy through the right to require, leaving section 106 for matters specific to a particular site. The tests in regulation 122 of the Community Infrastructure Levy Regulations 2010 would still have applied to whatever remained, so an obligation would still have had to be necessary, directly related to the development and fairly and reasonably related in scale and kind.

Review mechanisms and viability negotiation would have reduced in scope for standard residential schemes and persisted for complex ones. Nothing in the design removed the need for a Viability Assessment where a scheme could not carry the standard charge.

What a test and learn approach means in practice

The government's stated approach to rollout was to introduce the levy gradually through a small number of authorities, evaluate, then extend. Read that phrase carefully, because it means two things for a developer.

First, that any introduction would be geographically uneven for a period, so a scheme in one authority could face the levy while an identical scheme in the neighbouring authority faced the existing one. Second, that transitional provisions would matter more than the levy itself for anything already in the pipeline, since the treatment of permissions granted before the switch decides the cost.

For now neither applies, because no authority is operating the levy.

Planning a scheme while the position is unsettled

The practical advice has not changed in three years.

1. Budget on the current position: the existing levy where the authority has an adopted charging schedule, plus section 106 obligations negotiated in the usual way.
2. Check the charging schedule and any published indexation, since the existing levy is index linked annually.
3. Keep the commencement notice discipline, because the penalties for missing it are real and unrelated to any reform, as set out in CIL commencement notices and the surcharge for missing one.
4. Check relief and exemption entitlement early, including the routes covered in CIL relief for charities and social housing.
5. Where a scheme will be built out over many years, ask your solicitor to consider what a change in the charging regime would do to the section 106 drafting, particularly on phased contributions.

Avoid building a financial model around a levy that does not exist. Developers who assumed the reform would arrive and priced land accordingly have had an uncomfortable few years.

Where to follow the position accurately

Primary sources only, and in this order.

The Act itself on legislation.gov.uk, where the in-force status of each provision is recorded. Statutory instruments as they are made, which is where any regulations bringing the levy into force would appear. Written ministerial statements and departmental publications on gov.uk for policy direction. And parliamentary material for the progress of any amending legislation.

PlanScope's planning law timeline is a place to follow reform news as it is added. For anything with a financial consequence, read the instrument rather than the summary, and record the date you checked.

This is general guidance, not legal advice, and it describes the position as at the date of writing. 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.