Coronavirus Influences Levy

17th August 2020

The Community Infrastructure Levy (CIL) is the payment system for contributing financially toward local services and infrastructure when planning permission is granted. CIL regulations are applied by local authorities and are notoriously strict historically with no flexibility for error, relaxation of payment dates or changes to the triggers for making payments.

However, the Business and Planning Bill receiving Royal Assent on 22nd July 2020 brought with it the awaited introduction of the CIL Coronavirus Regulations 2020, which offers some essential relief to the development industry during this difficult time. The temporary regulations, which will remain in place until the 31st July 2021, make the required legislative changes to provide the flexibility needed to assist with cash flow issues many developers are experiencing.

The accompanying guidance to the CIL Coronavirus Regulations, explains how relevant CIL payments should be treated during the Coronavirus pandemic. It covers:

  • The deferral of CIL payments
  • Disapplying late payment interest
  • Crediting interest already charged to developers
  • How the CIL Coronavirus Regulations impact on the collection of Mayoral CIL in London

Under new regulation 72A, developers with an annual turnover of under £45million, who are experiencing financial difficulties as a direct impact of coronavirus and thereby unable to pay an amount of CIL, may request the CIL payment be deferred. Any such request can be made between 22nd July 2020 and 31st July 2021 (the material period). This may include payments which were due prior to the material period but remain outstanding. The regulations are to apply to any payment that falls due on or after 21st March 2020 (the lockdown date).

The first trigger for a CIL payment is when development commences. If the development is not implemented within the given timeframe the permission could lapse and a new planning application could be needed. There are associated risks of going through the determination process again, both financially and procedurally. However, under the same Business and Planning Act 2020, extensions to planning permissions have also been temporarily introduced.

In line with the new CIL Coronavirus Regulations, a deferral request is to be made in writing no more than 14 days before, or as soon as practicable after the date the CIL payment is due. Following receipt of the request, the collecting authority must decide whether to grant or refuse within 40 days. Any forthcoming grant or deferral request applies for a maximum of 6 months from the date the request is received. A revised demand notice is issued stating the amounts and the day on which the payment is due. Further deferral requests can be made if still within the material period.

For developers or landowners that do not qualify for relief under the new CIL Coronavirus Regulations there is still the opportunity within the ‘normal’ regulations for developers or landowners to apply for relief under ‘exceptional circumstances’. Each Council’s CIL is underpinned by locally based viability so the applicant would require a full viability assessment to support their application to determine whether relief can be given in part or in full.

There are other options for a revised planning strategy to take advantage of other existing mechanisms within the planning system which take into account the current circumstances, depending on where you are in the development timetable.

The CIL Coronavirus Regulations are an example of how the Business and Planning Act can help to keep the development industry moving. The Act was introduced in response to the impact of Covid-19 and the regulations detailed in this article are only temporary measures but form part of the wider picture whereby the Government aims to re-build the country’s economy. Arguably, the Coronavirus has also been the catalyst for implementing permanent change across the planning system and this Act highlights the importance the Government places on the development industry to progress our new future (read more).

If you are considering deferring your CIL payments or you need advice on planning strategy and would like to discuss the options available to you, do get in touch with us. We are here to help.

Jamie Wallace, Associate

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