Community infrastructure levy - Landlords Financial | Bookkeeping Services Manchester

The Sunday Times’ property supplement has recently highlighted cases of homeowners who have extended their properties and been caught out by the community infrastructure levy (CIL, dubbed the ‘extension tax’) and been left with large and unexpected bills.

We take a look at the nature of the CIL and explain when it applies and when exemptions are available.

Nature of the CIL

The CIL is a charge that can be levied by local authorities on new development in their area. The aim is to raise funds to support local development. The CIL only applies in areas where a local authority has consulted on, and approved, a charging schedule which sets out its levy rates and published that schedule on their website. Thus, the charge may not apply everywhere and, where it does apply, different rates will be charged in different areas.

When it applies

New developments which create additional floor space of 100 square metres or more may potentially be liable for the charge. The charge is levied per square metre.

However, some developments may be eligible for exemptions or reliefs.

Exemptions

Not all developments fall within the scope of the CIL, and some may be eligible for relief or exemption. This may be the case for residential extensions and annexes, and for houses and flats built by self-builders.

However, there are strict criteria which must be met and procedures which must be followed in order to secure the relief or the exemption. Failure to follow the procedures to the letter may mean that the exemption or relief is not given, resulting in an unnecessary bill, which potentially may be very large.

Need to apply for exemption in advance

One of the key points to note is that the exemption for residential annexes and extensions and that for self-build houses and flats is only available where the exemption has been applied for and obtained prior to the commencement of the development. The exemption cannot be applied for retrospectively and any decision to waive the bill is at the discretion of the council.

As highlighted by The Sunday Times, householders and self-builders have only become aware of the levy once their development is complete and they have received a bill. At this point, they have missed the opportunity to apply for the exemption.

The takeaway here is to do your homework prior to commencing development work and check if your council charges the levy and whether you need to apply in advance for an exemption. Failure to do this could prove very costly.

Community infrastructure levy - Landlords Financial | Bookkeeping Services Manchester

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