The Community Infrastructure Levy charges gross internal area, credits floorspace in lawful use, and indexes the rate: each step moves the bill by six figures.
The Community Infrastructure Levy is the charging authority's rate per square metre, times the net chargeable area, times an index ratio. The net area is the new gross internal area, less any retained floorspace that has been in lawful use, less a pro rata share of in-use floorspace demolished. On an illustrative 5,400 sq m scheme of 60 flats over a shop, replacing a 1,200 sq m building in use, CIL is 758,593, or 12,643 a flat. Had the old building stood empty too long to count, the bill would be 975,333.
Worked in full in The Real Estate Development Manager by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
CIL applies in England and Wales to most new development that creates a dwelling or 100 sq m or more of new floorspace, in areas where the council has adopted a charging schedule. The schedule sets rates by use and often by zone. The regulations then turn those rates into a bill with one formula per rate:
CIL at rate R = R × A × IP ÷ IC
A = GR − KR − (GR × E ÷ G)
G = gross internal area of the whole chargeable development; GR = the part charged at rate R; KR = retained in-use floorspace in that part; E = in-use floorspace demolished; IP, IC = the index for the year of permission and for the year the schedule took effect
Excel, per rate: =Rate*MAX(0,GIA_R-K_R-GIA_R*E/GIA_total)*Ip/Ic
A building counts as in use if part of it has been in lawful use for a continuous period of at least six months within the three years ending on the day planning permission first permits the development. Since 2020 the index is the RICS CIL Index.
| Input | Value |
|---|---|
| Residential, gross internal area, sq m (60 flats) | 5,000 |
| Ground floor retail, gross internal area, sq m | 400 |
| Total new floorspace G, sq m | 5,400 |
| Residential rate, per sq m (illustrative) | 150 |
| Retail rate, per sq m (illustrative) | 50 |
| Existing warehouse in lawful use, demolished, sq m | 1,200 |
| Index, year the schedule took effect (illustrative) | 300 |
| Index, year of planning permission (illustrative) | 380 |
Rates and index figures here are illustrative. Use the charging schedule of the authority, the zone the site falls in, and the published index for the two years concerned.
Step 1, the in-use credit. E ÷ G = 1,200 ÷ 5,400 = 22.2 per cent. The credit is not taken off the residential first: it is spread across every rate in proportion to its floorspace. The residential part gets 5,000 × 22.2% = 1,111.11 sq m, the retail part 88.89 sq m.
Step 2, the net chargeable areas. Residential A = 5,000 − 0 − 1,111.11 = 3,888.89 sq m. Retail A = 400 − 88.89 = 311.11 sq m.
Step 3, apply the rates. 150 × 3,888.89 = 583,333 and 50 × 311.11 = 15,556, before indexation.
Step 4, index. 380 ÷ 300 = 1.2667. Residential 738,889, retail 19,704: 758,593 in total, 12,643 a flat and 3.61 per cent of an illustrative 21,000,000 gross development value.
CIL is charged on gross internal area, but homes are sold on net area. On a block at 80 per cent efficiency the levy per square metre sold is a quarter higher than per square metre built. The same ratio drives land value in how the net-to-gross ratio changes residual land value.
| In-use floorspace demolished, sq m | Residential A, sq m | Total CIL | Per flat |
|---|---|---|---|
| 0 (vacant too long, or greenfield) | 5,000.00 | 975,333 | 16,256 |
| 600 | 4,444.44 | 866,963 | 14,449 |
| 1,200 (case) | 3,888.89 | 758,593 | 12,643 |
| 1,800 | 3,333.33 | 650,222 | 10,837 |
| 2,400 | 2,777.78 | 541,852 | 9,031 |
Every square metre of qualifying existing floorspace is worth about 180 of levy here. That is why a land diligence checklist asks for evidence of occupation, not just a measured survey: leases, rates bills and utility records for six continuous months in the three-year window. A warehouse that has stood empty for three and a half years earns no credit, and the bill rises by 216,741, 28.6 per cent.
| Index at permission | Ratio | Total CIL |
|---|---|---|
| 300 | 1.0000 | 598,889 |
| 340 | 1.1333 | 678,741 |
| 380 | 1.2667 | 758,593 |
| 420 | 1.4000 | 838,444 |
The index is fixed by the year the permission is granted, not the year the levy is paid, so a permission granted in December and one granted in January can carry different bills for the same scheme.
CIL sits in the residual appraisal as a cost with a date, usually near the start of construction, so it is funded for most of the build and carries finance. Almost every pound of it comes off the land value. On this scheme the in-use credit alone is worth 216,741 to a landowner who can prove occupation, before finance, which is the right number to have in mind when a seller lets the building fall vacant ahead of a sale. The method for the full residual is in how to calculate residual land value.
The Real Estate Development Manager follows a scheme from land and appraisal through consent, cost and delivery, and the free workbook for this case carries the residual appraisal and the land diligence stages in which this check belongs.
Only if the building was in lawful use for a continuous six months within the three years before the planning permission. Then its gross internal area is credited, spread pro rata across the rates. On the illustrative scheme 1,200 sq m in use cuts the levy from 975,333 to 758,593. If the building had stood empty too long, the credit, 216,741, is lost.
The rate in the charging schedule is multiplied by the index for the year planning permission is granted divided by the index for the year the schedule took effect. Since 2020 that is the RICS CIL Index. With illustrative figures of 380 and 300 the ratio is 1.2667, adding 159,704 to an unindexed bill of 598,889.
Gross internal area, not the net saleable area. So the levy per square metre sold is higher than the rate suggests. On the illustrative scheme the total of 758,593 is 140.48 per sq m of new gross internal area, after the in-use credit, and 3.61 per cent of an illustrative 21,000,000 GDV.
This article is one calculation from The Real Estate Development Manager. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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