Julia Berry, planning specialist at Reed Smith, discusses the Community Infrastructure Levy regime in the wake of the Covid-19 pandemic

We have been waiting since the government’s announcement on 13 May to see the detail of the promised changes to the Community Infrastructure Levy (CIL), designed to help developers who are affected by the pandemic. This detail will require a draft statutory instrument, to be approved by Parliament. As yet, no draft has been published, so it is still unclear what impact these amendments will have and when they will be brought forward.

One thing we do know is that they are not going to help all property developers. The proposal was to limit the benefits to SMEs with an annual turnover of less than £45m. It is not clear why this arbitrary figure has been chosen, other than it reflects other Treasury support schemes in different areas, and the government’s apparent belief that the impact of the pandemic will be tougher on smaller companies, as it claims was the case after the 2008 global crisis.

The current crisis, however, is quite different.

The government claims to be listening to the development industry as it will be a “really powerful force” for economic recovery in the short time and for delivering growth in the medium and long term. In reality, all developers will need this assistance, both over the next few months and also years. If the government were indeed listening closely, would the promised help not be rather more extensive, helping the entire industry, and with a wider reach? At present, all we expect is the deferral of payments that will still be due in full and the waiver of interest penalties.

Development costs

CIL is a levy on new development to raise funds for local infrastructure. It is a front-loaded tax, which can be a significant barrier to development commencing as it is payable on the commencement of a development that falls within its remit. In many cases, CIL constitutes one of the biggest single development costs.

There will be many developments that will have started before lockdown but were then delayed or completely stalled, however the CIL payments will still be due despite the fact that any cashflow will also have stalled. Deadlines for implementing planning consents remain the same. This will leave developers either having to commence a development and pay CIL during the pandemic in order to keep the planning consent alive, or shelve the project until a better time, perhaps even indefinitely.

With that in mind, and pending the new regulations (indeed, in some cases before they were even announced), some councils have taken matters into their own hands, offering some developers CIL lifelines by way of voluntarily issuing revised CIL demand notices which defer payments for a set period, or by offering increased instalment programmes. Although the charging authorities are relying on broad discretions to effect many of these changes, some of these approaches have a questionable legal basis. The proposed regulations would provide the opportunity to address this.

Surely more comprehensive assistance than the ability to defer payments and disapply interest for SMEs is needed, in order for that powerful force of development to benefit the country? The government could enable a scheme of payment postponements, commensurate with the delay suffered by the relevant scheme as a result of the pandemic, or even a blanket scheme deferring all payments for, say, three months. After all, the charging authorities are not able to actually spend much of the incoming cash currently so any delays would not be unduly damaging.

Radical solutions

Even as the regulations stand, approaches that are more radical could be adopted. Charging authorities could consider changes to the tariffs themselves, or targeted discounts to encourage the delivery of specific categories of development, with the potential for imposing deadlines on commencement, progress and delivery, which would have to be met.

Authorities can also review their instalment policies, reducing the minimum liability thresholds and the proportion and number of instalments allowed. At present, failure to make an instalment payment results in the full amount being due immediately. This should be relaxed in the current circumstances but would require further amendments to the regulations.

Authorities could also be encouraged to consider the wider use of exceptional circumstances relief. There are a number of mandatory requirements which need to be met before this relief can be applied (including, for no clear reason, that a s106 agreement should be in place), and a claim can only be made prior to commencement. These requirements could usefully be relaxed in the current circumstances to apply automatically to all developments where viability has changed, whatever stage they have reached. In addition, a right to review negotiated s106 contributions could be re-introduced in parallel. However, both would require legislative changes that do not currently appear to be on the government’s wishlist.

The CIL regulations were introduced over ten years ago and only envisaged economic growth and rising land values. They have no inherent flexibility to adapt to the very different scenario that we are currently facing. Even a temporary relaxation of their rigid application is urgently needed for all development and all developers if the industry is going to meet the coming challenges successfully, and help deliver the economic growth which the government acknowledges it can play a big part in.


Julia BerryCommunity Infrastructure Levy,


Reed Smith

Twitter: @reedsmithllp

LinkedIn: Reed Smith



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