Appendix 3: Regulation 116 - valuations for charitable relief
The Valuation Office Agency's (VOA) technical manual for Community Infrastructure Levy.
The following examples are based on the rates of Community Infrastructure Levy (CIL) as below:
|
Residential development |
£50 per square metre (m2) GIA |
|
Office development |
£40 per m2 GIA |
|
Industrial development |
£30 per m2 GIA |
|
Residential institutions |
£25 per m2 GIA |
Discretionary charitable relief available in area at 50%
These rates are for illustrative purposes only.
The examples are assumed to take place within a year of the Charging Schedule being adopted unless otherwise indicated.
Example 1
Planning permission for:
Factory - GIA 1,000m2
A 20 year lease at a fixed rent of £1 has been granted to a charity that is going to occupy the factory for charitable purposes. The freehold is owned by a developer.
|
The value of the 20 year lease granted to the charity say |
= |
£700,000 |
|
The value of the freehold interest say |
= |
£250,000 |
|
Total value of the interests |
= |
£950,000 |
CIL calculation:
1,000m2 @ £30 per m2 = £30,000
Apportionment:
The charity is exempt from the liability to pay CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£30,000 x (£700,000 ÷ £950,000) = £22,105
Therefore, charity liability for CIL is £Nil
The developer is liable for CIL as follows:
£30,000 x ( £250,000 ÷ £950,000 ) = £7,895
Comments
The collecting authority received a claim for charitable relief from the charity. They determined that the claim met the requirements of regulation 43 including that the chargeable development was to be used wholly or mainly for charitable purposes. Therefore the charity was exempt from liability to pay CIL in accordance with an apportionment assessment carried out under regulation 34.
Example 2
Planning permission for:
|
Office building A – GIA Office building B – GIA GIA of chargeable development – |
3,000m2 2,000m2 5,000m2 |
The freehold of building A is owned by a charity that is going to occupy it for charitable purposes and the freehold of building B is owned by a developer who is constructing both buildings and will let building B to a private company.
|
The value of the freehold interest in building A = The value of the freehold interest in building B = Total value of the interests = |
£5,800,000 £3,875,000 £9,675,000 |
CIL calculation:
5,000m2 @ £40 per m2 = £200,000
Apportionment:
The charity is exempt from the liability to pay CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£200,000 x (£5,800,000 ÷ £9,675,000) = £119,897
Therefore, charity liability for CIL is £Nil
The developer is liable for CIL as follows:
£200,000 x (£3,875,000 ÷ £9,675,000) = £80,103
Comments
The collecting authority received a claim for charitable relief from the charity. They determined that the claim met the requirements of regulation 43 including that the chargeable development was to be used wholly or mainly for charitable purposes. Therefore the charity was exempt from liability to pay CIL in accordance with an apportionment assessment carried out under regulation 34.
The charity and the developer are joint owners of the site but they each own the freehold interest in a physically different part of the site. Therefore, regulation 43(2)(b) is not relevant in this example and charitable relief is applicable.
Example 3
Planning permission for:
Nursing Home – GIA 2,000m2
20 flats – GIA 1,500m2
GIA of chargeable development – 3,500m2
The freehold in the whole is owned by a charity that will use the nursing home for charitable purposes. The site of the flats is let on a 125 year lease to a private sheltered housing company at a rent of £400,000 pa subject to 5 yearly reviews.
|
Value of the freehold interest = |
£1,000,000 |
|
Value of the long leasehold interest = |
£3,000,000 |
|
Total value of the interests = |
£4,000,000 |
CIL calculation:-
|
Value of the freehold interest = |
£1,000,000 |
|
Value of the long leasehold interest = |
£3,000,000 |
|
Total value of the interests = |
£4,000,000 |
|
2,000m2 @ £25 per m2 = |
£ 50,000 |
|
2,500m2 @ £50 per m2 = |
£125,000 |
|
£175,000 |
Apportionment:-
The charity is exempt from the liability to pay CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£175,000 x (£1,000,000 ÷ £4,000,000) = £43,750
Therefore, charity liability for CIL is £Nil
The developer is liable for CIL as follows:
£175,000 x (£3,000,000 ÷ £4,000,000) = £131,250
Comments
The collecting authority received a claim for charitable relief from the charity. They determined that the claim met the requirements of regulation 43 including that the chargeable development was to be used wholly or mainly for charitable purposes. Therefore the charity was exempt from liability to pay CIL in accordance with an apportionment assessment carried out under regulation 34.
Example 4
Planning permission for:
Office building – GIA 2,500m2
GIA of chargeable development – 2,500m2
The freehold is owned by a charity that has let the site for 125 years to a developer at a rent of £100,000 per annum reviewed on a 5 yearly basis in accordance with the increase in the RPI. The charity is to hold the freehold as an investment from which the rent will be applied for charitable purposes.
|
Value of the freehold interest = |
£1,000,000 |
|
Value of the long leasehold interest in building = |
£3,000,000 |
|
Total value of the interests = |
£4,000,000 |
CIL calculation:
2,500m2 @ £50 per m2 = £125,000
Apportionment:
The charity is entitled to discretionary relief at 50% from CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£125,000 x (£1,000,000 ÷ £4,000,000) = £31,250
|
Charity liability for CIL is |
£31,250 |
|
less relief @ 50% |
£15,625 |
|
£15,625 |
The developer is liable for CIL as follows:
£125,000 x £3,000,000 ÷ £4,000,000 = £93,750
Comments
The collecting authority received a claim for charitable relief from the charity. They determined that the claim met the requirements of regulation 44 including that the whole or greater part of the chargeable development was to be held as an investment and the profits applied for charitable purposes. Therefore the charity was entitled to discretionary relief at 50% in accordance with an apportionment assessment carried out under regulation 34.
Example 5
Planning permission for:
Hostel – GIA 3,000m2
GIA of chargeable development – 3,000m2
CIL calculation:
3,000m2 @ £25 per m2 = £75,000
The freehold in the land is owned by a local authority that has let the site to a charity for the homeless at £20,000 pa to be reviewed 5 yearly to 10% of the full rental value of the completed hostel.
Apportionment:
At the date of the apportionment the collecting authority has valued the freehold interest at £250,000 and the leasehold interest at £1,800,000 (total £2,050,000). The charity appealed against the decision and proposed a freehold value of £250,000 and a leasehold value of £2,500,000 (total £2,750,000).
The charity is exempt from the liability to pay CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£75,000 x (£1,800,000 ÷ £2,050,000) = £65,854
Therefore, the charity liability for CIL is £Nil
The freeholder is liable for CIL as follows:
£75,000 x £250,000 ÷ £2,050,000 = £ 9,146
OR
The charity is exempt from the liability to pay CIL in respect of the sum apportioned to its interest in accordance with the formula in regulation 34 as follows:
£75,000 x (£2,500,000 ÷ £2,750,000) = £68,182
Therefore, the charity liability for CIL is £Nil
The freeholder is liable for CIL as follows:
£75,000 x ( £250,000 ÷ £2,750,000) = £6,818
OR
As determined by the appointed person
Comments
The collecting authority received a claim for charitable relief from the charity. They determined that the claim met the requirements of regulation 43 including that the chargeable development was to be used wholly or mainly for charitable purposes. Therefore the charity was exempt from liability to pay CIL in accordance with an apportionment assessment carried out under regulation 34.
The value of the material interests must be decided on the facts of the case having regard to the evidence submitted by the parties. As the leaseholder charity is appealing against the collecting authority’s apportionment on the grounds that the valuation they have used in the apportionment formula is incorrect, the onus of proof is on the charity.
The value of the material interest to be used in the apportionment formula must be decided on the facts of the case having regard to the evidence submitted by the parties. This evidence may, for example, include professional valuations, details and analysis of comparable evidence, etc.