Introduction
The Community Infrastructure Levy has never been short of critics, nor complications. It briefly looked as though its time was up, with the proposed new Infrastructure Levy, promising a cleaner, simpler system. However, the IL was scrapped when the current government came to power, CIL survived and it remains firmly embedded in the planning landscape. Understanding and navigating the CIL regime competently is therefore an essential skill for planning and property practitioners. As such, we will set out a series of articles looking at the basics of CIL, recent appeal cases, pitfalls and how to avoid them.
Basics: What is CIL?
CIL is a mechanism for securing developer contributions towards infrastructure needed by local authorities to support development of an area (although it is not mandatory, and not all local authorities have introduced it). It is charged per square metre of net additional gross internal area (GIA) of floorspace, with each local authority setting its own rates through a charging schedule. Typically, there is a premium placed on residential and large-scale retail development, with lower rates for employment uses. Payment is generally due when development starts (although provisions exist for phased payments and instalments in certain circumstances). CIL applies to "development", which includes anything done by way of, or for the purpose of, the creation of a new building; or anything done to, or in respect of, an existing building.
Several exemptions and reliefs exist where CIL liability may not arise or may be reduced:
- Minor development exemption: Development of less than 100 sqm gross internal floor space is exempt (unless it creates a residential dwelling, in which case the levy is payable). Buildings that people do not normally go into, or only go into intermittently for maintenance, are also excluded.
- Floorspace deduction: Where part of an existing building has been in lawful use for a continuous period of six months within the past three years, the parts of that building to be demolished or retained and forming part of the development can be deducted from the total GIA used to calculate the CIL charge.
- Self-build exemption: Houses, flats, residential annexes and residential extensions built by self-builders may qualify for exemption.
- Charitable relief: Where a charitable institution owns the material interest and the chargeable development will be used wholly or mainly for charitable purposes, it may be exempt from CIL.
- Social housing relief: Affordable housing (including shared ownership) is eligible for 100 per cent relief, provided it remains as social housing for a period of seven years from commencement.
- Exceptional circumstances relief: A rarely used discretionary relief that can be applied by local authorities for sites with specific and exceptional cost burdens where charging CIL would render development unviable.
Calculating CIL – Floorspace Deduction
CIL is calculated on the gross internal area (GIA) of the chargeable development. The CIL Regulations prescribe how to calculate the net chargeable area, providing that the "retained parts of in-use buildings" can be deducted from the GIA of the chargeable development. Deductible floorspace includes:
(a) retained parts of 'in-use buildings'; and
(b) for other relevant buildings, retained parts where the intended use following completion of the chargeable development is a use that could be carried on lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development.
To qualify as an 'in-use building', the building must contain a part that has been in lawful use for a continuous period of at least six months within the three-year period ending on the day planning permission first permits the chargeable development. Crucially, 'lawful use' in this context means actual use, not merely a permitted planning use. Where the local authority considers it has insufficient information or information of insufficient quality to establish that existing buildings qualify as 'in-use buildings', it may deem the gross internal area of those buildings to be zero. Whether a building is in use is a matter of fact and degree, based upon the evidence. The burden of proof lies with the owner/developer, who must establish on the balance of probabilities that the requirements have been satisfied.
The floorspace deduction has potential to reduce or eliminate CIL liability entirely, making it essential to address this accurately and comprehensively at the earliest stage – whether during due diligence before purchasing a property or when submitting the CIL Additional Information Form with a planning application. However, it continues to generate disputes between developers and local authorities. Recent VOA appeal decisions have explored these issues further:
Actual use, not merely permitted use: The building must have been in actual lawful use for the requisite continuous six-month period. R (Hourhope Ltd) v Shropshire Council [2015] established this principle, holding that a pub which had closed for business but still housed equipment, furnishings and chattels. This was held insufficient to satisfy the requirement, as the storage was ancillary to the main use as a public house and not a principal use – therefore it was not an "in-use building". Hourhope confirmed that the question of whether use has ceased is guided by the length and reason for the interruption, and the intention of future use.
The issue arose again recently in VOA appeal 1875193 (2025) where it was argued that another pub was in lawful use during the look‑back period because the upstairs flat was let. This was rejected as the lawful planning use was as a public house, which had ceased when trading stopped; residential occupation was ancillary to that use and not a separate planning unit. As per Hourhope, ancillary activities (residential/storage) are not sufficient to constitute a principal use for the purposes of the floorspace deduction.
In contrast, VOA appeal 1792686 (2022), the applicant contested that whilst a bank had closed to the public, banking activity continued through use of safes and strong rooms for storage and safekeeping of bank and customer assets. Although the local authority argued that lawful use would require the bank to remain open to the public, and that the actual use was akin to B8 storage (which would have been unlawful), it was decided on the evidence that storage of customers' valuables was an essential part of banking services and therefore continued to be lawfully 'in-use' and qualified for the deduction.
Similarly, in VOA appeal 1793622 (2022), the local authority contested that a cow shed was derelict and not in use. On the evidence, however, long-term agricultural equipment storage as well as temporary livestock operations were sufficient to constitute an "in-use building". The storage was ancillary to the main farming use of the continuing farm operation.
Part of building: It is well established that only part of the relevant building need satisfy the in-use requirement. In VOA appeal decision 1792345 (2023) , it was found that this may even be a part not subject to the planning permission in question. Permission was granted for conversion of the ground floor of a building to incorporate with the existing first floor unit to provide accommodation for dual use as annex/holiday accommodation. The local authority considered that as the planning permission related only to the ground floor, first floor use was irrelevant. However, it was found that whilst ground floor use was inconclusive on the evidence, the first floor had been in lawful use and therefore could be included in the GIA as a retained part of the in-use building.
In VOA appeal 1846148 (2024), both the KR(i) deduction (for retained parts of in-use buildings) and the KR(ii) deduction (for other retained buildings where the intended use continues lawfully) were covered. This decision addressed retrospective consents and confirmed that the section 73 rules regarding "new build" exclusions should apply equally to section 73A permissions, even though the CIL Regulations do not explicitly reference section 73A.
Pitfalls: The case of Giordano Ltd v LB Camden [2018] highlights the severe penalties of failing to establish lawful use. A limited commencement of development under a pre-CIL planning permission for residential conversion of an office building was insufficient to establish a lawful residential use upon which to base a subsequent CIL floorspace deduction claim. The courts found that whilst the previous permission for change of use had been implemented, the building remained a shell – insufficient to qualify as having a lawful residential use under the CIL Regulations. Consequently, no floorspace deduction was available, and CIL liability for the revised scheme was £547,500. Giordano remains a stark reminder that development works should not start until CIL consequences are known and accepted. It also underlines the value of the floorspace deduction and the importance of confirming the lawful use of a property at the date of grant of any planning permission that would incur CIL liability.
