Levy offsets for demolished floorspace and the in-use test
The deduction for existing and demolished floorspace can remove most of a levy bill, but only where the building was in lawful use for six continuous months within the preceding three years.
The Community Infrastructure Levy is charged on net additional floorspace, so the gross internal area of a building being demolished or retained can be deducted from the chargeable amount. The deduction is not automatic. Under regulation 40 of the Community Infrastructure Levy Regulations 2010, existing floorspace only counts where the building is an in-use building, which means it contains a part that has been in lawful use for a continuous period of at least six months within the three years ending on the day planning permission first permits the chargeable development. Fail that test and the whole of the existing floorspace is ignored, and the levy is charged on the entire new build area.
On a conversion or a redevelopment of a vacant building, that single test can be the difference between a modest bill and one that makes the scheme unviable.
How the net chargeable area is calculated
The arithmetic in Schedule 1 to the Regulations is straightforward once the inputs are agreed. Take the gross internal area of the chargeable development, deduct the gross internal area of retained parts that were in lawful use, deduct the gross internal area of in-use buildings that will be demolished, and apply the charging schedule rate to what is left, indexed as the Regulations require.
Measurement is where the money is. Gross internal area is measured to the internal face of the external perimeter walls and includes internal walls, partitions, columns, stairwells, lift shafts, plant rooms and mezzanines. It excludes open balconies, open external canopies and open car ports. The RICS code of measuring practice is the reference the collecting authority will expect, and schedules that mix gross internal with gross external or with net internal area are the commonest source of disputes.
Measure the existing building before demolition, from survey rather than from historic drawings, and keep the drawings that support the figure. Once the building has gone, so has the evidence.
The lawful use requirement
Two words carry weight. The use has to be lawful, meaning it does not breach planning control and was not carried out in breach of a condition. An unauthorised office in an outbuilding, a flat created without permission, or a use operating outside the hours a condition permits does not count, however real the occupation was.
Where a use has become lawful through the passage of time, that needs establishing properly, and a lawful development certificate is the only formal route to confirming it. On a site where the planning history is messy, resolving the lawful use is worth doing before the permission is granted rather than afterwards.
The building also has to be a building. Hardstanding, open storage areas, a demolished shell with no roof and structures that were never buildings do not generate a deduction.
The continuous use period test
The test has three elements, and all three have to be satisfied:
| Element | Requirement |
|---|---|
| Duration | at least six months, continuous |
| Window | within the three years ending on the day permission first permits the development |
| Scope | a part of the building, not the whole of it |
Continuity is strict. Six separate months of occupation spread across the three years does not satisfy a continuous period of six months, and a gap in the middle breaks it.
The window ends on the day planning permission first permits the chargeable development, which for a full permission is usually the day it is granted and for an outline permission is the day the last reserved matter or pre-commencement condition is discharged. That second case catches people, because a building vacant for two years at the date of outline permission may be well outside the window by the time the scheme is actually permitted.
Which leads to the most useful planning move available on a vacant site: put a part of the building back into lawful use for a continuous six months, and keep the evidence. A short lease, a storage agreement or a genuine meanwhile occupation can preserve a deduction worth far more than the rent, which is one of the reasons meanwhile use affects land value in ways a simple rental analysis misses.
Evidence that a building was in use
The collecting authority will ask, and the burden is on the applicant. Assemble more than you think you need:
- business rates records showing the rateable occupier and the period of assessment
- council tax records for residential use
- leases, tenancies, licences and rent demands with dates
- utility bills showing consumption rather than standing charges alone
- insurance documents describing the occupied use
- payroll, accounts or VAT records tied to the address
- dated photographs of the interior in use, and delivery or waste collection records
Consumption data matters more than paperwork. A lease with no electricity usage behind it invites the authority to say the building was not actually in use, and a standing-charge-only bill is evidence of a connection rather than of occupation.
Where the use was partial, say precisely which part, with an area and a plan. The test asks whether the building contains a part in lawful use, so identifying that part clearly is what secures the deduction for the building.
Buildings demolished before the application
This is the avoidable disaster. A relevant building for these purposes is one situated on the land on the day planning permission first permits the chargeable development. Demolish beforehand and there is no building on the land on the relevant day, so there is nothing to deduct, even though the floorspace plainly existed and was plainly in use.
The practical rules that follow are blunt. Do not demolish before permission is granted. Where demolition is needed for site investigation or safety, take advice first and document the position. Where an earlier permission has already authorised the demolition, the interaction with the levy calculation needs checking case by case rather than assumed, because the outcome depends on the sequence of permissions and dates.
Keep the measured survey, the photographs and the use evidence from before demolition in every case. They are the only record that will exist.
Partially occupied buildings
The drafting is generous here and worth understanding. The test is whether the building contains a part that has been in lawful use for the continuous period. It does not require the whole building to have been occupied, and it does not scale the deduction by the proportion occupied.
So a four-storey building with one floor let for eight months within the window is an in-use building, and the deduction available is the gross internal area of the building that qualifies rather than a quarter of it. That makes the identification of the occupied part, and the evidence for it, disproportionately valuable.
Where a site contains several buildings, each is assessed separately. Two of five buildings qualifying means the deduction covers those two, so apportion the floorspace schedule building by building rather than presenting a single site total.
Challenging the authority's figure
There is a route and there are deadlines. After a liability notice is issued, a request can be made to the collecting authority under regulation 113 for a review of the chargeable amount, and that request has to be made within 28 days of the notice. If the review does not resolve matters, an appeal on the chargeable amount lies to the Valuation Office Agency under regulation 114, to be made within 60 days of the liability notice.
Those deadlines are short and they are not generally extended, so diarise them from the date on the notice. Most successful reviews turn on one of three things: a measurement error in gross internal area, an in-use building wrongly excluded for want of evidence, or a charging schedule rate or indexation applied incorrectly.
Model the levy with and without the deduction in the appraisal, show which buildings you say qualify and on what evidence, and keep that analysis consistent with the Viability Assessment and with any listed building conversion viability case being run. PlanScope drafts those documents from your scheme inputs and flags the figures it does not hold. Reports should be reviewed before submission and PlanScope does 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 in-use test for CIL?
A building qualifies for the existing floorspace deduction where it contains a part that has been in lawful use for a continuous period of at least six months within the three years ending on the day planning permission first permits the chargeable development. All three elements have to be met, and six non-continuous months does not count.
Do I lose the CIL deduction if I demolish before getting permission?
Generally yes. The deduction applies to buildings situated on the land on the day planning permission first permits the chargeable development, so a building already demolished is not there to deduct. Keep the measured survey, photographs and use evidence, and take advice before demolishing anything ahead of permission.
Does the whole building have to have been occupied?
No. The test asks whether the building contains a part in lawful use for the continuous six month period, and the deduction is not scaled by the proportion occupied. One let floor in a four-storey building can qualify the building, which makes identifying and evidencing the occupied part valuable.
What evidence proves a building was in lawful use?
Business rates or council tax records, leases and rent demands, utility bills showing actual consumption, insurance documents, payroll or VAT records tied to the address, and dated interior photographs. Consumption data carries more weight than paperwork alone, because a standing charge shows a connection rather than occupation.
How do I challenge a CIL liability notice?
Request a review of the chargeable amount from the collecting authority under regulation 113 within 28 days of the liability notice. If that does not resolve it, appeal to the Valuation Office Agency under regulation 114 within 60 days of the notice. Both deadlines are short and are not generally extended.
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.