Section 106 obligations or the levy: which applies

Both can apply to the same planning permission, and on most major schemes both do. The Community Infrastructure Levy is a fixed charge per square metre set by the charging authority in an examined schedule, payable on commencement, with no negotiation. A planning obligation under section 106 of the Town and Country Planning Act 1990 is a negotiated agreement that does something the levy cannot: it delivers affordable housing, restricts how a site is used, and secures site-specific works that make a particular development acceptable. The section 106 versus CIL question is rarely either or. It is a question of which costs sit where, and whether the council is asking for the same thing twice.

What each mechanism can and cannot fund

The levy is a tariff. It raises a pot of money for infrastructure to support development across the charging area, and the authority decides later what to spend it on, reporting annually in an infrastructure funding statement. You cannot direct it to a particular junction or school, and the authority cannot refuse permission because you would rather it went somewhere else.

An obligation is site specific and can do things money cannot. It can bind the land, so successors in title are caught. It can restrict occupation until a road is built. It can secure affordable housing in a defined tenure mix, which the levy cannot deliver at all because it is a receipt rather than a product.

The statutory tests apply to obligations only

Regulation 122 of the Community Infrastructure Levy Regulations 2010 is the provision that matters most in negotiation. An obligation may only be taken into account in granting permission where it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it.

Those three tests are legal requirements rather than guidance. If an authority asks for a contribution towards a facility your scheme does not affect, the test to apply is the second one, and the answer is usually visible in the officer's own evidence base. The levy escapes all of this because it is not a material consideration in the decision at all. It is a charge that follows the permission.

The pooling restriction that once capped contributions to five obligations per infrastructure project was removed in September 2019, which changed what authorities can ask for on small sites in levy-charging areas. Our note on the pooling restriction removal covers where that leaves contributions today.

Calculating the levy and paying it

The charge is the rate in the charging schedule, applied to the net additional chargeable floorspace, adjusted by an index published annually. Existing floorspace can be deducted where the buildings have been in lawful use for a continuous period of at least six months within the preceding three years, which is why demolition schemes turn on occupancy evidence rather than on floor areas.

The procedure catches people out more often than the arithmetic:

1. Assume liability in writing before development starts.
2. Wait for the authority's liability notice, which states the chargeable amount.
3. Serve a commencement notice before any material operation on site.
4. Pay on the due date, or under the instalment policy if the authority has one.

Miss the commencement notice and you can lose the instalment arrangement and pick up a surcharge. Worse, the mandatory reliefs are conditional on the notice being served before commencement, so a self-builder who starts groundworks early can lose an exemption that was already granted.

Relief, exemptions and indexation

Mandatory relief covers social housing, development by charities for charitable purposes, self-build housing, and residential annexes and extensions. Self-build relief carries a three year clawback, so a house sold within that window becomes chargeable at the original amount.

Discretionary relief for exceptional circumstances exists, but the authority has to have adopted it, and the conditions are narrow enough that most schemes never qualify. Indexation applies each year to the rates in the schedule, so a charge estimated at outline stage will not be the charge demanded at reserved matters. Check the authority's current published schedule and index figure rather than the one in an old appraisal.

Double counting and how it is prevented

Regulation 122 does the work here too. Where the levy funds a category of infrastructure, an authority should not also seek an obligation for the same item, because the obligation would fail the necessity test once the levy receipt is available.

Infrastructure funding statements, published annually by charging and receiving authorities, set out what has been collected and what it has been allocated to. Read the current statement before you accept a contribution request. If the item appears in the authority's levy spending priorities, ask why the obligation is needed as well.

The place this argument usually lands is education and open space. Affordable housing is the clearest case on the other side, because the levy cannot deliver it and an Affordable Housing Statement has to explain what is proposed, in what tenure and secured by what mechanism.

Changing an obligation after permission

An agreement can be varied by a deed of variation at any time if both parties consent. Where they do not, section 106A allows an application to the authority to modify or discharge an obligation five years after it was entered into, with a right of appeal to the Secretary of State under section 106B if the authority refuses.

Viability is the common reason for asking. A scheme agreed in one market and built in another may not support the affordable housing percentage it committed to, and the authority will want an open book Viability Assessment reviewed by its own consultant. Whether viability is argued at application stage or left to plan-making is a separate strategic question, which we look at in viability at plan making or at application stage.

The levy has no equivalent route. There is no viability appeal against a chargeable amount once the schedule applies.

Budgeting for both on one scheme

Treat them as two lines in the appraisal with different risk profiles. The levy is calculable now, from the published schedule, the index and your net additional floorspace, and it is almost certain. The obligation package is an estimate until the heads of terms are agreed, and it moves with the affordable housing policy, the education contribution formula and whatever the highway authority asks for.

Two practical points. Get the floorspace measurement checked early, because a chargeable area calculated from the wrong drawing set is the most common cause of a surprise demand notice. And ask the case officer for the draft heads of terms before the committee report is written, not after.

The Infrastructure Levy powers in the Levelling-up and Regeneration Act 2023 remain on the statute book and have not replaced the Community Infrastructure Levy or section 106 as at September 2026. Verify the current position on gov.uk before planning around it.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. You can browse the report types that support an obligations and viability case. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.