It is generally recognised that the Community Infrastructure Levy (CIL) is payable in respect of development authorised under the streamlined “prior approval” regime in the same way as it is chargeable in respect of development which is authorised under the traditional planning application route. As was explained in our first article in this series here, CIL is calculated by reference to the floor space of the development, for which permission has been obtained. There are a couple of circumstances however in which the floor space in an existing building (the use of which is being changed) can be netted off against the floor space in the new development. The one which tends to be relied upon by developers most often is the “in use building” deduction.
The other circumstance in which floorspace within an existing building that is to be retained can be netted off from the floorspace calculation is where the floorspace can be used for its intended purpose without requiring further planning permission.
This so called “lawful intended use” deduction is set out in Regulation 40(7)(ii) of the CIL Regulations 2010. It provides that the gross internal area of the retained parts of the building should be deducted from the floor space calculation “where the intended use following completion of the chargeable development is a use that is able to be carried on lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development”. An appeal decision issued in October 2025 (reference 1867784) suggests that this deduction may be much more widely available than what was previously thought to be the case.
The developer appealed to the Valuation Office Agency (VOA) against a determination made by the local authority in respect of a prior approval that had been issued for the change of use of a building from Use Class E (Offices) to residential development (Use Class C3) under Class MA Part 3, Schedule 2 of the Town and Country Planning (General Permitted Development) (England) Order 2015 (Permitted Development Order).The developer drew the attention of the VOA to Regulation 8(7) which provides that for schemes authorised under a general consent (such as prior approvals issued under the Permitted Development Order) the permission first permits the development on the day on which the council received a notice of chargeable development from the developer in respect of the permission. A notice of chargeable development is a notice which a developer must serve on the council before the development is commenced in reliance on a prior approval (Regulation 64).The developer argued that on the day before it served the notice, the prior approval had already been issued and therefore the floor space in the existing building could be used for its intended use (i.e. residential use) without further planning permission.
The Council argued that the developer’s interpretation of the Regulations would effectively exempt all changes of use under permitted development rights from CIL liability and this is not consistent with the purpose of CIL but the VOA agreed with the developer’s argument. It referred to the decision of the courts in Giordano v Camden LBC [2019] which explained how the “lawful intended use” deduction applies to permitted development rights in the following terms:
“the requirement in regulation 40(7)(ii) is not that the intended use of the retained parts of the building must match their extant lawful use as it happens to be on the relevant day, but a use that has, by then, been authorised or would in any event be lawful. They are not the same thing. The latter would certainly include an extant lawful use. But it would also embrace – as in this case – a use that can lawfully be carried on in the retained parts of the building under an implementable planning permission granted before, or on, the relevant day, or with the benefit of “permitted development” rights.”
It remains to be seen whether this interpretation would be supported by the courts but as matters currently stand, a developer who has obtained a prior approval for a change of use but is unable to rely upon the "in use building" deduction should argue in any event that the ”lawful intended use” applies and appeal to the VOA if the Council disputes that.
Read the previous article in our series here: CIL and Prior Approval.
