Phased payments and instalment policies for the levy

A CIL instalment policy phased payment arrangement is the difference between finding the whole levy within 60 days of starting on site and spreading it across the build programme. The default in the Community Infrastructure Levy Regulations 2010 is the harsh one: the full chargeable amount falls due within 60 days of the date development starts. Everything softer than that depends on the collecting authority having adopted an instalment policy, and on you serving the right notices in the right order before a wheelbarrow moves.

Developers lose money on this regularly, and almost always on procedure rather than on the rate.

How payment timing is set

Liability is calculated when permission is granted and the collecting authority issues a liability notice setting out the chargeable amount. Nothing is payable at that point. The trigger for payment is the start of development, and the mechanism that connects the two is a pair of notices you serve.

The first is the assumption of liability, which tells the authority who is paying. The second is the notice of when development will start, which must reach the authority no later than the day before works begin. Only after it receives that second notice can the authority issue a demand notice telling you what to pay and when.

Miss the second notice and three things happen at once. Any instalment entitlement is lost, so the whole amount becomes payable immediately. Any relief or exemption already granted falls away. And a surcharge is added, calculated as 20 per cent of the chargeable amount or £2,500, whichever is lower.

That is the single most expensive administrative error in the regime, and it is committed by competent developers every year because a groundworker starts site clearance a week early.

Instalment policies and how far they vary

Authorities may adopt an instalment policy and most charging authorities have. There is no national template, so the shape varies considerably: the number of instalments, the trigger dates, and the minimum chargeable amount above which instalments are available all sit in local discretion.

A policy will typically set out something like the pattern below, which is illustrative rather than a standard.

Read the policy document itself rather than a summary on the authority's web page, because the detail that matters is in the conditions attached to the instalment right. Common conditions include that liability has been assumed, that the notice of the start of works was served on time, and that no instalment is in arrears. Breach any of them and the policy usually provides that the whole outstanding balance becomes payable at once.

Which version of the policy applies is worth confirming in writing with the collecting authority, because authorities revise these policies and the version that governs your permission may not be the one on the website today.

Phasing a permission to phase the liability

The more powerful tool is phasing the permission itself. Where a planning permission expressly provides for development to be carried out in phases, each phase is treated as a separate chargeable development for levy purposes. That means a separate liability notice, a separate start of development, and a separate 60-day clock for each phase.

The practical effect is large. A scheme that would otherwise generate a single liability at the moment the access road is built instead generates liabilities as each parcel comes forward, which matches the levy to the revenue that funds it.

Two conditions have to be met. The permission must be phased on its face, with the phases defined, and the phasing must be in the permission rather than in a later approval or a side letter. Retrofitting phasing after grant means an application under section 73 of the Town and Country Planning Act 1990 to vary the relevant condition, which creates a new permission and raises a fresh question about which levy rates and which index figure apply.

So the drafting of the phasing condition belongs in the application documents, not in a post-decision conversation. Ask for it, define the phases on a plan, and check the decision notice when it arrives.

Outline permissions and phased triggers

Outline permissions phase naturally, because development cannot start until reserved matters are approved. Where an outline permission is phased, liability for each phase is calculated by reference to the approval of the last reserved matter for that phase, so the chargeable amount for a later phase is fixed later and at a later index figure.

That cuts both ways. Index movement between phases can raise the cash amount even though the adopted rate per square metre has not changed. Build an index assumption into the appraisal and test it, because a long build-out on a large site can carry several years of indexation on the later phases.

Where the appraisal is doing heavy lifting on affordable housing or abnormal costs as well, the levy line needs to sit alongside them rather than in a separate note. The way those inputs are presented is covered in more detail in the guidance on how to format a viability appraisal submission, and the levy is one of the few inputs in that appraisal that is not negotiable at all.

Late payment, surcharges and stop notices

The enforcement toolkit is deliberately unpleasant, and the authority has little discretion in applying most of it.

1. Late payment surcharge: 5 per cent of the overdue amount, subject to a minimum, once payment is 30 days late.
2. A further 5 per cent surcharge once payment is six months late, and another at twelve months.
3. Late payment interest on the overdue amount, charged at 2.5 percentage points above the Bank of England base rate.
4. A CIL stop notice, which prohibits further development on the site until the overdue amount is paid.

A stop notice is the one that ends a project. Breaching it is an offence, and the funder will treat service of one as an event of default. Authorities do serve them, usually after correspondence has failed, so the sensible response to a cash flow problem is to talk to the collecting authority before the first surcharge rather than after the third.

There is no viability route out of a levy liability. Unlike a section 106 obligation, the levy is a fixed charge, and the only reductions available are the statutory reliefs and, where the authority has adopted it, exceptional circumstances relief. That asymmetry is why the viability assessment treats the levy as a fixed cost and pushes the negotiation onto the obligation instead.

Building the liability into the cash flow

Three practical steps, in order.

Get the liability notice reconciled against your own calculation as soon as it arrives. Gross internal area measurement disputes are the most common source of error, and the existing floorspace deduction for lawful buildings in use is the most commonly missed credit. There is a review and appeal route on calculation, with short deadlines, so check the notice within days rather than weeks.

Then map the instalment triggers against the development programme and the funding drawdown. If the first instalment falls 60 days after a start that is itself driven by a funding condition, the two dates need to be reconciled before the facility is signed.

Finally, decide who assumes liability. It can be the landowner, the developer or another party, and it can be transferred, but the party who has assumed liability is the one the authority pursues. On a site being sold on with the benefit of permission, the assumption of liability should move with the land and the documentation should say so.

The highway and infrastructure costs that sit next to the levy in the appraisal behave quite differently, and the treatment set out for highway works costs in a development appraisal should be read alongside this.

What to confirm before you start on site

Confirm that liability has been assumed and acknowledged. Confirm the notice of the start of works has been served, dated at least one day before the first operation on site, and keep the acknowledgement. Confirm which instalment policy version applies and get it in writing. Confirm whether the permission is phased and, if it is, that the phase boundaries on the plan match the phase you are about to start. And confirm with your contractor that site clearance, fencing and temporary works count as a start of development, because they do.

The Infrastructure Levy created by the Levelling-up and Regeneration Act 2023 is intended to replace this regime in England in time. As at the date of this article it has not displaced the 2010 Regulations, so the procedure above remains the one that applies, and the position should be checked on legislation.gov.uk before relying on it.

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. You can start from a postcode to see which reports a scheme is likely to need.