Householders, developers and property professionals are being urged to familiarise themselves with planning laws in respect of CIL across England & Wales.
Property tax specialist E3 Consulting has cautioned that ‘ignorance is no defence’ when it comes to the Community Infrastructure Levy (CIL).
Local authorities have introduced new or revised schedules for the charge on certain types of new residential and certain other types of developments – for example retail, offices, student halls – as part of the planning process.
CIL is a ‘tax’ applied to certain new developments and used by many local planning authorities to fund vital infrastructure although there are exemptions and reliefs allowed – but only if applied for before work starts on site.
Managing director Alun Oliver FRICS, who co-founded E3 with wife Nicky in 2003, said: “CIL quite rightly delivers infrastructure for local communities but it can be a minefield for some property owners and real estate businesses to navigate.
“It is not the fault of local authorities, but some homeowners, smaller developers and property professionals generally are not aware of the complexities and strict criteria involved, which mean they can miss out on the exemptions and reliefs available.”
Most new developments which create net additional floor space of 100 square metres or more, or create a new dwelling, are potentially liable for CIL.
However, some schemes for homeowners, charities or social housing may be eligible for relief or exemption from the levy – including residential annexes and extensions, and houses and flats which are built by ‘self-builders’.
Alun said: “CIL doesn’t just apply to large housebuilders and developers.
“It is not uncommon to hear of self-builders or homeowners building an extension or an annexe being blissfully unaware of CIL until a large bill arrives.
“By then it is too late because work has already started. Once the project commences, the owner loses the right to review or appeal the numbers, as well as the various exemptions or reliefs that may have been available. These cannot be dealt with retrospectively.
“It is clear from the published Planning Inspectorate decisions, that ignorance of the rules is no excuse.”
Alun added: “Failure to seek advice or getting poor quality advice are perhaps the biggest concerns for projects where CIL may be an issue.
“In other parts of the country, we have seen some advisers and even local planning authorities telling homeowners various things – mostly with good intent – but contrary to the realities of the CIL regulations and ultimately landing the owners a significant CIL liability – commonly in the range of £10,000 to £40,000, or higher.
“Failing to follow the correct process means relief could be lost. The key to avoiding the pitfalls is to take timely and specialist advice from an expert who truly understands the rules at an early stage and get it in writing.”
The CIL was introduced by the 2008 Planning Act and initiated in April 2010. Local authorities levy a fixed charge per square metre of new floor space, which they can vary by location, size and type of development, although most commonly against residential projects.
E3 has successfully saved clients millions of pounds from CIL. Individual project successes range from £600 to £1.8m.
It works collaboratively with developers and homeowners as well as solicitors, architects, planners and project managers to ensure the correct CIL liability is calculated, legislative requirements are met and any reliefs or exemptions are applied.
E3 Consulting is headquartered at Ocean Village in Southampton with offices in London and at the Peartree Centre in Ferndown, near Bournemouth.
It provides specialist property tax advice to owners, investors and occupiers of UK real estate. The business advises on Capital Allowances, Community Infrastructure Levy (CIL), Land Remediation Relief and Repairs and Maintenance. Alun, as a CEDR accredited Mediator regularly undertakes independent reviews and expert reports to mitigate CIL, wherever possible within the context of the CIL Regulations.