Section 3: Regulation 114 appeals – calculation of the chargeable amount

The Valuation Office for Agency's (VOA) technical manual for Community Infrastructure Levy (CIL).

3.1 General

These appeals relate to disputes over the correct calculation of the CIL charge to be paid on the commencement of development for a particular planning permission in accordance with the CIL regulations and the charging authority’s published charging schedule. The chargeable amount has to be calculated in accordance with the rules set out in Schedule 1 of the CIL Regulations 2010 (as amended). These appeals will involve determining disputes over factual matters and possibly some legal interpretation but there are no valuations involved.

3.2 Calculation of the Chargeable Amount

The collecting authority must calculate the amount of CIL payable (the “chargeable amount”) in respect of a chargeable development in accordance with regulation 40 and the rules set out in Schedule 1 of the Regulations.

Schedule 1 sets out different rules for ‘Standard cases’ (in Part 1 of the Schedule), ‘Amended planning permissions’ (in Part 2 of the Schedule) and ‘Pre-CIL permissions amended when CIL is in effect’ (Part 4 of the Schedule).

Standard cases

For ‘Standard cases’ the chargeable amount is an amount equal to the aggregate of the amounts of CIL chargeable at each of the relevant rates (Schedule 1, paragraph 1(1)). The ‘relevant rates’ are the rates, from the relevant charging schedules, at which CIL is chargeable in respect of the chargeable development.

Regulation 40(5) provides that the amount of CIL chargeable at a given relevant rate (R) must be calculated by applying the following formula:-

RxAxIP/ IC

Where:-

A = The deemed net area chargeable at rate R;

IP = The index figure for the year in which planning permission was granted;

IC = The index figure for the year in which the charging schedule containing rate R took effect.

‘Amended’ planning permissions

Where a planning permission for a chargeable development, which is granted under s.73 of TCPA 1990, changes a condition subject to which a previous planning permission for a chargeable development was granted, then the chargeable amount has to be calculated in accordance with the rules set out in Schedule 1, Part 2. A detailed explanation of these rules, with examples, can be found in the MHCLG CIL Guidance in the section entitled ‘Calculating the Levy Liability’.

Pre-CIL permissions ‘amended’ when CIL is in effect

Where a planning permission for a chargeable development, which is granted planning permission under s.73 of TCPA 1990, changes a condition subject to which a previous planning permission for a development was granted, and the previous permission was a pre-CIL permission then the chargeable amount has to be calculated in accordance with the rules set out in Schedule 1, Part 4.

In addition to calculating the chargeable amount in such cases it may also be necessary to calculate the ‘notional relief’ that would have been applicable to the pre-CIL permission. There is a separate right of appeal against the collecting authority’s calculation of the notional relief under Schedule 1, paragraph 9.

A detailed explanation of these rules, with examples, can be found in the MHCLG CIL Guidance in the section entitled ‘Calculating the Levy Liability’.

3.3 The Chargeable Development

The ‘chargeable development’ is the development for which planning permission is granted. Regulation 9 provides that:-

(a) Where planning permission is granted by way of a general consent, the chargeable development is the development identified in a notice of chargeable development submitted to the collecting authority in accordance with regulation 64 (or prepared by the authority under regulation 64A).

(b) In the case of a grant of a phased planning permission (as defined in regulation 2) each phase of the development is a separate chargeable development.

(c) In Wales, where the effect of a planning permission granted under section 73 of TCPA 1990(c) is only to change a condition subject to which a previous planning permission was granted by extending the time within which development must be commenced, the chargeable development is the development for which permission was granted by the previous permission as if that development was commenced.

(d) Where a planning permission is granted under s.73 of TCPA 1990, the chargeable development is the most recently commenced or re-commenced chargeable development.

(e) For the purposes of paragraph (d) above, chargeable development is re-commenced where:-

i. the chargeable development (“the earlier development”) was commenced;

ii. work on the earlier development was halted and a different chargeable development (“the later development”) that was granted planning permission under section 73 of TCPA 1990 was commenced on the relevant land; and

iii. the later development was subsequently halted and the earlier development is continued.

3.4 The Net Area Chargeable

Schedule 1, paragraph 1(6) provides that the ‘net area chargeable’ (A in the formula in paragraph 3.2 above) must be calculated by applying the following formula:-

GR - KR - ((GR x E) / G)

Where:-

G = the gross internal area of the chargeable development;

GR = the gross internal area of the part of the chargeable development chargeable at rate R;

KR = the aggregate of the gross internal areas of the following:-

(i) retained parts of in-use buildings, and

(ii) for other relevant buildings, retained parts 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;

E = the aggregate of the following:-

(i) the gross internal areas of parts of in-use buildings that are to be demolished before completion of the chargeable development, and

(ii) for the second and subsequent phases of a phased planning permission, the value Ex (as determined under regulation 40(8)), unless Ex is negative, provided that no part of any building may be taken into account under both of paragraphs (i) and (ii) above.

Paragraph 1(7) of Schedule 1 provides that the value Ex must be calculated by applying the following formula:-

EP - (GP - KPR)

Where:-

EP = the value of E for the previously commenced phase of the planning permission;

GP = the value of G for the previously commenced phase of the planning permission; and

KPR = the total of the values of KR for the previously commenced phase of the planning permission.

3.5 The Index Figures

The index figures referred to in the formula in paragraph 3.2 above (IP and IC) for the year 2020 onwards, contained in the Royal Institution of Chartered Surveyors (RICS) CIL Index. If the RICS CIL Index is not published the figures are those contained in the national All-in Tender Price Index published by the RICS. The figure for a given year is the figure for 1st November of the preceding year (paragraph 1(5) of Schedule 1)).

3.6 Definition of Building

Schedule 1, paragraph 1(10) provides that for the purpose of calculating the net chargeable area (paragraph 3.4 above), “building” does not include:-

(a) a building into which people do not normally go;

(b) a building into which people go only intermittently for the purpose of maintaining or inspecting machinery; or

(c) a building for which planning permission was granted for a limited period.

3.7 Retained and Demolished Buildings

Schedule 1, paragraph 1(10) provides that “relevant building” means a building which is situated on the relevant land on the day planning permission first permits the chargeable development and that “retained part” means part of a building which will be:-

(a) on the relevant land on completion of the chargeable development (excluding new build),

(b) part of the chargeable development on completion, and

(c) chargeable at rate R.

‘New build’ means that part of the chargeable development which will comprise new buildings and enlargements to existing buildings, and in relation to a chargeable development granted planning permission under section 73 of TCPA 1990 (“the new permission”) includes any new buildings and enlargements to existing buildings which were built pursuant to a previous planning permission to which the new permission relates.

3.8 Buildings in Use at the Relevant Date

For the purpose of calculating the net chargeable area (paragraph 3.3 above), Schedule 1, paragraph 1(10) provides that “in-use building” means a building which:-

(i) is a relevant building, and

(ii) contains a part that has been in lawful use for a continuous period of at least six months within the period of three years ending on the day planning permission first permits the chargeable development;

3.9 The Gross Internal Areas

Gross Internal Area (GIA) is not defined in the regulations but when CIL was introduced the generally accepted method of calculation was set out in the RICS Code of Measuring Practice.

Schedule 1, paragraph 1(8) provides that where the collecting authority does not have sufficient information, or information of sufficient quality, to enable it to establish that a relevant building is an ‘in-use’ building, it may deem it not to be an in-use building.

Schedule 1, paragraph 1(9) provides that where the collecting authority does not have sufficient information, or information of sufficient quality, to enable it to establish:-

(a) the GIA of a building situated on the relevant land (prior to development); or

(b) whether a building situated on the relevant land (prior to development) is in lawful use, the collecting authority may deem the GIA of the building to be zero.

3.10 De Minimis Chargeable Amount

If the chargeable amount produced by applying the formula in paragraph 3.2 above is less than £50 the chargeable amount is deemed to be zero (regulation 40(3)).

3.11 Exemption for Minor Development

The calculation of the chargeable amount should reflect the fact that ‘minor development’ is exempt. ‘Minor development’ is defined in regulation 42. Liability to CIL does not arise in respect of a development if, on completion of that development, the GIA of ‘new build’ on the relevant land will be less than 100m2. However, this does not apply where the development will comprise one or more additional dwellings, so, for example a new dwelling with a GIA of 90m2 would not be exempt. ‘New build’ means that part of the development which will comprise new buildings and enlargements to existing buildings.

3.12 Reliefs and Exemptions

Exemptions or reliefs are not relevant to the calculation of the amount of CIL payable in accordance with regulation 40 and Schedule 1 and are therefore not relevant in an appeal under Regulation 114. As the term ‘chargeable development’, as defined in regulation 9, makes no mention of any exemptions or reliefs the chargeable development for the purposes of regulation 40 and Schedule 1 is simply the whole of the relevant development.

The application of exemptions or reliefs is calculated separately to the level of CIL and acts to reduce the amount payable in respect of that development. This is reflected in the wording of the exemptions and reliefs, which are expressed in terms of “relief from liability to pay CIL” and “exempt from liability to pay CIL”.

If only part of a development qualifies for Charitable Relief then it will be necessary for the collecting authority to apportion the chargeable amount and this may be subject to a separate appeal under regulation 116 (see Section 5).

3.13 Appeals

The right to appeal against the collecting authority’s calculation of the chargeable amount is contained in regulation 114. Details of who can appeal and the time limits for making an appeal are set out in Section 6 of this Manual. Regulation 114(6) provides that where an appeal is allowed the appointed person must calculate a revised chargeable amount.

3.14 Possible Issues in Appeals

Regulation 114 appeals could relate to the calculation of any of the various elements that feed into the formula in paragraph 3.2 above including:-

• the GIAs of the proposed development and existing buildings that are to be demolished or subject to change of use
• the GIAs of parts of a development that attract different CIL rates
• the GIAs of parts of a development that straddle the boundary between different charging authority areas or the boundary of different charging zones within a single charging authority’s area
• the GIA of an extension that is near to the 100 square metre minor development threshold
• the GIA of part of a development that qualifies for social housing relief
• the interpretation of GIA in the RICS Code of Measuring Practice
• interpretation of the charging schedule (e.g. the relevant intended use)
• which buildings are to be excluded from the GIAs of the proposed development, or the GIA of existing buildings, as they are buildings into which people do not normally go (e.g. plant buildings)
• whether part of the development should be excluded from the GIA because it is a structure rather than a ‘building’
• whether existing buildings are ‘in use’ at the relevant date
• whether existing buildings are in ‘lawful’ use at the relevant date

3.15 Examples

Examples to illustrate some of the issues that may arise in Regulation 114 cases are included in Appendix 1.