Landowners in Cornwall who are considering, or in the process of, selling land for the purpose of residential or commercial redevelopment, are likely to be affected by the new Community Infrastructure Levy (CIL) introduced by Cornwall Council on 1st January 2019. Caroline Daly, Chartered Legal Executive with Murrell Associates outlines the basics of the new tax and how it could affect you.
What is CIL?
CIL is a tax levied by local planning authorities on new buildings above a certain size, which is designed to help fund local infrastructure. As CIL is a tax, the amount payable is not negotiable (unlike the payments due under a section 106 agreement).
When was it implemented?
Charging under Cornwall Council’s schedule for eligible developments began on 01 January 2019 and applies in the case of planning permissions granted on or after 01 January 2019.
How is it charged?
CIL rates are expressed as pounds per square metre of the net internal area of development.
The rates of CIL chargeable in Cornwall vary depending on:
• the size of the proposed development;
• the area in which the proposed development is located; and
• whether the proposed development is residential or non-residential.
For residential developments in Cornwall, CIL charges can range from nil to up to £400 per square metre of internal floor space. For non-residential developments in Cornwall, CIL charges can range from nil to up to £100 per square metre of internal floor space.
Which developments are subject to CIL?
A development is liable for CIL if planning permission for it is granted on or after 01 January 2019 and if it:
• creates a new dwelling of any size; or
• creates over 100sqm of gross internal floor space (new build), before making deductions for existing floor space that is to be demolished; and
• involves new buildings or floor space into which people normally go.
Some developments (such as social housing) are eligible for relief from CIL provided that the appropriate forms and notices are served at the correct times.
Who has to pay CIL?
The obligation to actually pay the CIL is triggered by the implementation of planning permission granted on or after 01 January 2019. This can include site preparation works such as demolishing an existing building.
The person liable to pay CIL is the person who “assumes liability” to pay it, which is achieved by submitting an “assumption of liability notice” to the Council.
Assumed liability can be:
• withdrawn at any time before development commences, and
• transferred to another person after commencement of development, but before the 60 day window for payment of CIL has expired.
If no-one assumes liability, or if no new party assumes liability following withdrawal of liability, then responsibility for payment of CIL falls to those with a “material interest” in the land at the commencement of development.
A material interest is either freehold ownership of the land in question, or ownership under a lease with a term that expires more than seven years following the day on which planning permission is granted.
As such, if the requirement to pay CIL is triggered by the implementation of the planning permission, and the developer has not assumed liability or has withdrawn its assumption of liability notice, the obligation to pay the CIL can fall on the landowner.
Landowners selling or leasing property to developers for redevelopment purposes need to be aware of this potentially costly liability and ensure that their legal arrangements with developers are drafted in such a way as to protect them and ensure that responsibility for the payment of CIL at all times sits with the developer and that they are suitably indemnified.
If you would like to discuss the implications of CIL on your existing or future plans to develop land, please contact us on 01872 226990 or email us firstname.lastname@example.org