Obligations and the levy at different scheme sizes
The levy is arithmetic and obligations are argument. Here is how the two divide at each scheme size, where they must not overlap, and what to budget.
The split between section 106 obligations and the Community Infrastructure Levy changes shape as a scheme grows, and the question of section 106 or CIL thresholds is really two questions. The levy is a fixed charge per square metre that you can calculate before you buy the site. Obligations are negotiated, site specific, and only lawful where they pass three statutory tests. One is arithmetic, the other is argument.
Budget for both from the outset, because they are cumulative rather than alternatives, and because a levy liability of a size you did not expect arrives at the moment you start on site.
What each one does
The levy is charged on net additional floorspace, at rates set in the charging authority's adopted charging schedule, indexed annually. It is not negotiable, it is not related to the impacts of your particular scheme, and the money goes into a pot the authority spends on infrastructure. Liability arises when development starts on site.
Obligations under section 106 of the Town and Country Planning Act 1990 secure things that make a specific development acceptable: affordable housing, a road improvement, public open space, the transfer of land, a monitoring arrangement. Each obligation has to satisfy regulation 122 of the Community Infrastructure Levy Regulations 2010, meaning it must be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related to it in scale and kind.
Affordable housing is the clearest division of labour. The levy cannot deliver it. Affordable housing is secured through an obligation, which is why the obligation route remains central even in authorities that charge the levy on everything.
Where the two must not overlap
The old restrictions have gone. The pooling limit, which stopped authorities gathering contributions from more than five obligations towards one item, and the published infrastructure list that separated levy funded items from obligation funded ones, were both removed in September 2019. In their place authorities publish an annual infrastructure funding statement setting out what they received and what they intend to spend it on.
The protection against paying twice for the same thing now rests on the regulation 122 tests rather than on a list. So the question to ask when a contribution is sought for an item that looks like levy funded infrastructure is a narrow one: is this obligation necessary to make this development acceptable, over and above what the levy is funding.
Read the infrastructure funding statement before the meeting. If the statement says levy income is allocated to secondary school places, and the authority then seeks an obligation for secondary school places, you have a question to put and a document to put it with.
Small schemes and levy liability
Levy liability starts lower than people expect.
| Scheme | Usual position |
|---|---|
| Extension under 100 m² of new floorspace, not creating a dwelling | Minor development exemption from the levy |
| Extension over 100 m² | Chargeable on the net additional floorspace |
| One new dwelling | Chargeable, with a self-build exemption available if you will live in it |
| Two to nine dwellings | Chargeable, usually below the affordable housing threshold |
| Ten dwellings or more | Chargeable, and major development for affordable housing and other policy purposes |
The self-build exemption is the one that catches people out, because it is procedural. You have to claim it before work starts, submit the right form, and comply with the conditions afterwards, including occupying the dwelling as your main residence for three years. Miss a step and the full liability revives, with no discretion to forgive it.
The same discipline applies to starting on site. Submit the assumption of liability and the notice of the start of development before work begins. Starting without that notice can cost you the instalment policy and expose you to surcharges, and the authority has very little room to help.
Affordable housing and the obligation route
National policy sets the affordable housing threshold at major development, meaning ten or more dwellings or a floorspace equivalent, with lower thresholds available in designated rural areas. Below that threshold, authorities should not normally seek affordable housing contributions, and where a local plan tries to, the plan policy and the national position both need reading carefully.
At ten units and above the negotiation covers the percentage, the tenure mix, the size mix, the location of the units within the site, the transfer price, and the trigger points for delivery. An Affordable Housing Statement is the document that sets out your position, and it is far more persuasive when it names the registered provider you have spoken to and the terms discussed.
Vacant building credit is worth checking where you are redeveloping a building that has been out of use. It reduces the affordable housing requirement by reference to the floorspace of the vacant building, and the argument turns on whether the building has been actually vacant and was not abandoned.
The mix questions that arrive at this scale are dealt with in housing mix and space standards as schemes grow.
Monitoring fees and their basis
Since 2019 authorities have been able to charge a monitoring fee for obligations, provided the sum is fair and reasonable in relation to monitoring the obligation in question.
Two tests are worth applying to any figure put in front of you. Is it built up from the number of monitoring events and the officer time each requires, or is it a percentage of the total obligations. And is any part of it duplicated, where one officer will review a single annual report covering several obligations.
Ask for the calculation. Authorities that can produce it usually have a defensible figure, and authorities that cannot often move.
Viability engagement by scale
Viability enters at different points depending on size.
On a scheme below the affordable housing threshold there is rarely a viability conversation at all, because the policy asks for little that is negotiable.
On a scheme of ten to fifty units, viability arguments are usually about whether the full policy percentage of affordable housing can be delivered alongside the other obligations. The approach expected by national guidance is that plan policy has already been tested for viability, so the applicant has to show what is different about this site, with abnormal costs evidenced rather than asserted.
Above that, a formal Viability Assessment prepared to the profession's standards becomes a normal part of the submission, and it will be published. That last point changes behaviour. An assessment written on the assumption that nobody outside the council will read it is a liability, because objectors, councillors and the local press will read it.
Viability assessments are a report type where councils expect a suitably qualified author, and professional review before submission is strongly advised.
Budgeting both at the outset
Do this at appraisal stage, before the land price is agreed.
- Calculate the levy from the adopted charging schedule and the current index figure, on net additional floorspace, and check whether any relief or exemption applies and what claiming it requires in good time.
- Read the authority's obligations policy or supplementary planning document and list every contribution type it seeks, with the formula or rate for each.
- Read the infrastructure funding statement to see what is actually collected and spent.
- Add the affordable housing requirement as a value reduction rather than as a cost line, since the units transfer at a discounted price.
- Add the monitoring fees, the legal costs of the agreement on both sides, and the cost of any bond or surety required.
- Set a contingency for the difference between the policy position and the negotiated outcome, in both directions.
The item most often missed is the authority's own legal costs, which you pay, and which grow with every round of drafting.
One honest uncertainty about the medium term. The Levelling-up and Regeneration Act 2023 contains powers for an Infrastructure Levy intended to replace the current levy, and as at the date of writing those powers have not displaced the Community Infrastructure Levy Regulations 2010 in general use. Plan on the current regime and check the position before committing to a long programme, because the transition arrangements will matter for schemes consented under one system and built under another.
See PlanScope pricing for the cost of drafting the statements that support an obligations negotiation. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. For specialist technical reports, qualified professional input may be required. This is general guidance rather than legal advice, so take advice on levy liability and obligations for a specific scheme.
Frequently asked questions
When does Community Infrastructure Levy liability start?
The levy is charged on net additional floorspace under the adopted charging schedule, and liability arises when development starts on site. A minor development exemption applies where new build is under 100 m² and no new dwelling is created. One new dwelling is chargeable, though a self-build exemption is available if you will occupy it as your main residence.
Can affordable housing be funded through the levy?
No. Affordable housing is secured through a section 106 obligation, not through the levy, which is why the obligation route remains central even in authorities that charge the levy widely. The negotiation covers percentage, tenure and size mix, the position of the units on site, transfer price and delivery triggers.
Does the pooling restriction still apply?
No. The limit on pooling contributions from more than five obligations, and the published infrastructure list that separated levy funded from obligation funded items, were both removed in September 2019. Authorities now publish an annual infrastructure funding statement instead, and the protection against paying twice rests on the regulation 122 tests.
What is the affordable housing threshold?
National policy sets it at major development, meaning ten or more dwellings or the floorspace equivalent, with lower thresholds available in designated rural areas. Below that, contributions should not normally be sought. Where a local plan policy goes lower, read both the plan wording and the national position carefully before accepting the requirement.
How can the self-build exemption be lost?
By missing a procedural step. The exemption must be claimed on the prescribed form before work starts, and the conditions must be complied with afterwards, including occupying the dwelling as your main residence for three years. If a step is missed the full liability revives, and the charging authority has very little discretion to help.
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.