Section 106 or CIL: what each can lawfully pay for

Section 106 obligations and the Community Infrastructure Levy do different jobs, and the boundary between them is legal rather than a matter of preference. The section 106 versus CIL question comes down to this: an obligation can only be required where it meets three statutory tests, while the levy is a tariff on floorspace that the charging authority spends on infrastructure across its area. Site-specific mitigation that only this development makes necessary belongs in an obligation. General infrastructure capacity belongs to the levy.

The legal basis of each mechanism

A planning obligation is created under section 106 of the Town and Country Planning Act 1990. It is a covenant running with the land, entered into by the applicant and any other party with an interest, and it can require a payment, restrict use, require works, or require land to be transferred.

The levy comes from the Planning Act 2008 and the Community Infrastructure Levy Regulations 2010. A charging authority adopts a charging schedule after examination, setting rates per square metre by use and sometimes by geography, and the charge applies to net additional floorspace on development that creates it.

The two are not alternatives to be chosen between. Both can apply to the same permission, and the drafting has to make sure the applicant is not paying twice for the same thing.

The three tests an obligation must meet

Regulation 122 of the 2010 Regulations makes the policy tests statutory. A planning obligation may only be a reason for granting permission where it is:

1. Necessary to make the development acceptable in planning terms.
2. Directly related to the development.
3. Fairly and reasonably related in scale and kind to the development.

All three must be met, and the decision maker has to be satisfied of it. That is why a contribution towards a leisure centre four miles away, sought as a standard tariff from every scheme in the district, is vulnerable: it may be fairly related in scale but it is hard to show it is necessary to make this development acceptable.

Test one is the one to argue about. "Necessary" means the permission could not lawfully be granted without it, because otherwise the development would be unacceptable. If the officer's report can describe the scheme as acceptable and then add a contribution, the test is not met.

What the levy funds and who decides

The levy is spent on infrastructure to support the development of the area. The charging authority chooses what to fund, and it is not tied to the site that generated the receipt.

Two features follow from that. A proportion of receipts is passed to the parish or town council for the neighbourhood in which development took place, at a higher proportion where a neighbourhood plan is in place. And the authority has to publish an annual infrastructure funding statement setting out what it received, what it spent and what it intends to fund.

That statement replaced the older list of infrastructure projects, and it is the document to read before a pre-application meeting. It tells you what the authority considers to be levy-funded, which in turn tells you what it cannot lawfully seek again through an obligation.

Affordable housing is the significant exception. It is secured through section 106 obligations rather than through the levy, which is why an Affordable Housing Statement and a viability position remain central to major applications even in a levy-charging authority.

Site specific mitigation the levy cannot deliver

Some things can only be done through an obligation, because they are tied to the site and to the timing of the development.

Highway works are the one people get wrong most often. Physical works in the adopted highway are delivered through an agreement with the highway authority under the Highways Act 1980, not through the planning obligation itself, though the obligation may require the applicant to enter into that agreement.

Double counting and how councils avoid it

Since the pooling restriction that limited the number of obligations funding a single project was removed in 2019, the protection against double charging is regulation 122 itself plus the transparency of the infrastructure funding statement.

In practice authorities manage it in three ways: by publishing what the levy funds, by adopting a supplementary planning document on obligations that identifies what remains in section 106, and by checking at drafting stage that no contribution duplicates a levy-funded project.

Your check is simpler. For every contribution sought, ask which infrastructure it funds, whether that infrastructure appears in the authority's levy spending, and whether the officer's report explains why the development is unacceptable without it. If the answer to the last question is missing, ask for it in writing before the heads of terms are agreed.

Where the two overlap in practice

Overlap is common on major schemes. A development generating primary school demand may face both a levy charge that the authority intends to spend on school places and a request for an education contribution. Both cannot be justified for the same capacity.

Similarly, an authority may fund a strategic transport scheme through the levy while seeking a contribution towards a bus service serving the site, alongside the monitoring commitments set out in a Travel Plan. Those can coexist, because the bus service is site-specific mitigation and the strategic scheme is area-wide capacity. The distinction has to be articulated in the officer's report, and it is worth helping the officer articulate it.

Where the scheme is marginal, both streams feed into the appraisal. A Viability Assessment should state the levy at the published rate with indexation applied and the obligations at the amounts sought, so the review is testing the same package the planning case describes.

Questions to ask the officer at pre-application

Take this list into the meeting and get the answers in the written response.

1. Is the site subject to an adopted charging schedule, and at what rate and indexed to what date?
2. Which infrastructure does the authority currently fund from the levy in this area?
3. What obligations will be sought, and for each one, what makes the development unacceptable without it?
4. Is there an adopted supplementary planning document on obligations, and does it set formulas?
5. Will any obligation be index-linked, and to which index?
6. What monitoring fees are charged, and how are they calculated?
7. Which works will need a separate highways agreement rather than an obligation?
8. What is the authority's position on review mechanisms if viability is contested?

Answers on the record shorten the drafting stage considerably, and they give you the basis for a challenge if a contribution appears later that nobody could explain.

Browse the full set of report types on PlanScope if you are assembling the evidence base for a major application.

This is general guidance, not legal advice, and charging schedules, obligation policies and formulas differ between authorities and change over time, so check the current 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.