Phasing
CIL is payable on chargeable developments. In the case of phased planning permissions, each phase of the development is treated as a separate chargeable development for CIL purposes, meaning that the overall CIL bill can be broken down into smaller payments. However, developers should be aware of the following points if they’re looking to benefit from phased permissions:
- A permission can only be treated as being phased for CIL purposes if it explicitly specifies the order in which each phase must be developed.
- If an outline permission is phased (e.g. there are six phases), but the reserved matters approvals are not obtained on a phase by phase basis (e.g. one RMA covers phases 1-3 rather than only phase 1), then the RMA will not be treated for CIL purposes as being phased. In such a case, there will be one CIL bill for all three phases and commencement of development in any one of phases 1-3 will trigger CIL for all three phases.
Calculating CIL
CIL is based upon the gross internal area (GIA) of the chargeable development. The RICS Code of Measuring Practice sets out the method of calculating GIA but it doesn’t give any guidance on what is to be measured for CIL purposes. There are, therefore, often disagreements between developers and authorities regarding what should be included within the GIA calculation. The Valuation Office Agency has recently confirmed the following:
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Included within the GIA: porches; loft or storage space with a permanent access (e.g. a permanent staircase or doorway access); and internal walls and partitions between semi-detached dwellings or between self-contained apartments in each block.
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Excluded from the GIA: externally projecting fireplace recesses; projecting bay (oriel) windows; and loft space accessed by a loft ladder.
Each authority will also set out, in their CIL Charging Schedule, the rates (£ per sqm) at which CIL is to be charged in their area. An authority may set different rates for different intended uses of development. As such, it is important that developers take care in describing the uses in a planning application, as it could affect the amount of CIL payable. For example, in two related appeals, the higher CIL rates for residential use were applied to the medical/care area elements, the commercial facilities and the plant elements of a development, because the planning inspector had described the development as an extra care facility comprising a block of Class C3 dwelling houses with ancillary communal facilities.
Social housing relief and self-build exemption
Developers can rely on various reliefs and exemptions to reduce their CIL bill, but they can easily end up losing their right to these if they don’t comply with the strict procedural requirements – as two developers recently found out:
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Where a Liability Notice or revised Liability Notice predates 1 September 2019, social housing relief will be lost and late payment interest will be payable on the full CIL amount if a Commencement Notice isn’t served before commencement (Heronslea (Bushey 4) Limited v Secretary of State for Housing, Communities and Local Government [2022] EWHC 96 (Admin)). For Liability Notices or revised Liability Notices issued on or after 1 September 2019, relief will not be lost, but a surcharge capped at £2,500 will be payable.
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A developer must assume liability to pay CIL after planning permission has been granted but before development has commenced. As such, the self-build housing exemption and social housing relief are not available for retrospective permissions because it isn’t possible for a developer to assume liability by the appropriate point in time (Nathan Gardiner v Hertsmere Borough Council and the Secretary of State for Levelling Up, Housing and Communities [2022] EWCA Civ 1162).
In-use deduction
The floorspace of retained parts of in-use buildings can be deducted from the amount of floorspace that is CIL chargeable (known as the in-use deduction). An in-use building is one situated on the relevant land on the day on which planning permission first permits development (usually the date permission is granted, or later for outline or phased permissions), which contains a part that has been in continuous lawful use for at least six months within the three years preceding the date that permission first permits development. Recent appeals highlighted the following key points regarding this deduction:
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There is no definition of a building in the CIL Regulations, and it is inappropriate and incorrect to use the definition in the Town and Country Planning Act 1990 for CIL purposes. Instead, it must be given its dictionary definition – “a thing which is built; a structure; an edifice; a permanent fixed thing built for occupation, as a house, school, factory, stable, church, etc.” or “a structure with a roof and walls, such as a house or factory.”.
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Developers need to be careful when demolishing buildings before planning permission is granted, because if they demolish so much that there are no longer sufficient structures remaining onsite to be classified as buildings on the relevant date, the in-use deduction will not apply.
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Sufficient information of sufficient quality needs to be provided to the authority to enable it to establish that a relevant building is an in-use building, otherwise it can deem that the in-use deduction doesn’t apply. The evidence must demonstrate continuous use within the correct time period. Developers should also be wary of contradictory statements made in application documents or published on other public forums.
The making of judicial review challenges
The case of George Braithwaite and Melton Meadows Properties Limited v East Suffolk Council [2022] EWHC 691 (Admin) provides a useful reminder that any claim for judicial review must be brought within three months of the grounds for the claim arising. In this case, the developer brought a claim challenging a Liability Notice nearly 18 months after that notice was issued. As there were no good reasons for the delay, an extension of time wasn’t justified and application for permission to apply for judicial review was refused by the High Court.
For further details on the cases relating to deductions, exemptions and reliefs, see this article in EGi.
Authored by Caroline Stares.
