What is a community infrastructure levy?

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When individuals are developing on their land there are often extra costs outside of simply purchasing materials and the costs relating to building the property or even planning permission. Self builders are often met with additional costs, commonly referred to as the community infrastructure levy.

What is a self builder?

A self builder is when an individual has commissioned a house to be constructed on their land for the purpose of living in it. The self builder can therefore exercise how the house is built and may work with an architect in order to create their own personal build. This allows the self builder to build a house to their own specifications on their own land. The self builder has the final say on all matters relating to their would-be property and is afforded actual design input.

What is the community infrastructure levy?

The community infrastructure levy is an additional charge that can be levied by local authorities on new developments within their area. Local authorities that can charge the levy range from district councils, to national park authorities, to the Mayor of London. However, the levy does not apply to every local authority. Rather, the levy can only be charged in areas where a local authority has consulted and approved a charging schedule. This charging schedule sets out the levy rates. Charging schedules will be found on the local authority’s website, as a schedule of levy rates must be published there. A prospective self-builder therefore should view a local authority’s website to see if they are even initially applicable for the levy to be charged against them. 

Generally, the levy covers most new developments that add additional floor space of 100 square metres or more and developments that create a new property to live in. However, just because a self-builder fits this category does not automatically mean they will be subject to the levy. There are exemptions and relief from the levy that can be put in place. 

What developments are exempt or are granted relief from the levy?

Developments that add less than 100 square metres will not be subject to the levy. However, this is not applied to a dwelling. A dwelling of any size will be subject to the levy. Other exemptions come from the Community Infrastructure Levy Regulations (CILR) 2010, which includes buildings where people do not normally go into or buildings that people only go into intermittently for the purpose of inspecting or maintaining fixed plant and machinery (regulation 6(2)). However, local authorities can decide that certain types of development can benefit from a zero rate on the charging schedule. Structures such as wind turbines and pylons are also exempt from this levy. 

Residential annexes and extensions, as well as self-built houses and flats, can be given exemptions or relief from the levy by the local authority. However, the criteria for this would have to be applied and obtained before the commencement of development. Social housing that meets the relief criteria of regulation 49 CILR 2010 or 49A CILR 2014 can benefit from the exemption. Charitable developments that meet the relief criteria of regulations 43 to 48 CILR 2010 can also gain an exemption. However, all exemptions or relief must be applied to the development before building works are carried out. Once work has started, an exemption or relief may no longer be granted or applicable. 

Who is liable to pay the levy?

The person who owns the land is the one that is liable for the levy in any first instance. However, others involved in the development of the land may become liable. An individual can take advantage of payment windows or installments; however, a person must take liability for paying the levy before the development has commenced in order to have this benefit. If no one takes responsibility for the levy then it defaults to the landowner(s). In order to assume the liability for the levy, an assumption of liability form must be submitted to the local authority that is charging the levy. This liability can be transferred to other parties before the final payment has been made. More than one individual can assume the liability and it can be split accordingly. 

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