Community Infrastructure Levy (CIL) in London: What It Is, How Much You Pay, and How to Claim Exemptions

**The legal basis for CIL**:

The Community Infrastructure Levy (CIL) was introduced by the Planning Act 2008 and is administered through the Community Infrastructure Levy Regulations 2010 (as amended). CIL is a charge on new development — it is not a planning fee; it is payable separately, in addition to any Section 106 agreement, and in addition to standard planning application fees.

**CIL vs. Section 106 (S106)**:

• CIL and S106 are separate planning obligations that may both apply to the same development:
• •CIL: a standardised per-square-metre charge; calculated on the gross internal area (GIA) of new floorspace created; funds general infrastructure across the charging authority's area
• •Section 106: a negotiated site-specific legal obligation; used for affordable housing; site-specific transport measures; and other infrastructure directly related to the specific development — see `planning-obligation-s106-guide` for detail
• •CIL cannot fund affordable housing; S106 is used for affordable housing obligations on larger schemes
• •Both may be payable on the same development — it is important not to confuse them

**Mayoral CIL2 (MCIL2)**:

The Mayor of London charges a Mayoral CIL (MCIL2) on all CIL-liable development in Greater London. MCIL2 is charged in addition to any Borough CIL. The MCIL2 rate (as of 2025):

| Zone | Mayoral CIL2 Rate (per m² GIA) | |---|---| | Central London (broadly: EC, WC, W1, SW1, SE1, N1, E1, NW1) | £80/m² | | Rest of Greater London | £60/m² | | Suburbs (outer London) | £25/m² |

*Note: MCIL2 zones are defined on the GLA's MCIL2 charging schedule maps — exact zone boundaries do not follow borough boundaries. Check the MCIL2 zone for a specific postcode at london.gov.uk/programmes-strategies/planning/community-infrastructure-levy/community-infrastructure-levy-documents*

**Borough CIL**:

In addition to MCIL2, many London Boroughs charge a Borough CIL on development within their area. Borough CIL rates vary significantly between Boroughs and between zones within a Borough. Some London Boroughs have NOT adopted a Borough CIL charging schedule — in those Boroughs, only MCIL2 is payable.

Examples of Borough CIL rates in London (2025 — confirm current rates on the Borough's planning portal):

| Borough | Residential CIL rate (approx) | |---|---| | London Borough of Wandsworth | £0–£200/m² depending on zone | | Royal Borough of Kensington and Chelsea | £0–£500/m² depending on zone | | London Borough of Southwark | £0–£400/m² depending on zone | | London Borough of Islington | £0–£486/m² depending on zone | | London Borough of Hackney | £0–£200/m² depending on zone | | London Borough of Lewisham | £0–£150/m² depending on zone | | London Borough of Haringey | £0–£75/m² depending on zone | | London Borough of Barnet | £135/m² (flat rate) | | London Borough of Ealing | £0–£300/m² depending on zone | | London Borough of Tower Hamlets | £0–£250/m² depending on zone |

*These are illustrative examples only — Borough CIL rates change and zone maps change. Always confirm the current CIL rate on the specific Borough's planning portal CIL calculator or charging schedule before committing to a development.*

**How CIL is calculated — the formula**:

The CIL charge is calculated as:

CIL = CIL Rate (£/m²) × Net Additional Chargeable Floorspace (m²) × Relevant Index Figure

*Net Additional Chargeable Floorspace*: the CIL is charged on the net increase in gross internal area (GIA) created by the development. For a rear extension that adds 30m² GIA, the chargeable floorspace is 30m². If the extension replaces a demolished structure (e.g., an existing outhouse of 10m² GIA is demolished to build a 30m² extension), the chargeable floorspace is net: 30m² − 10m² = 20m² GIA.

*Relevant Index Figure*: CIL rates are set in a charging schedule and are indexed to the BCIS All-in Tender Price Index (TPI). The relevant index figure is the TPI at the date of granting planning permission, divided by the TPI at the date the charging schedule was adopted. This index adjustment means the effective CIL rate at the time of planning permission may be higher than the nominal rate in the charging schedule.

• *Example CIL calculation (London 2025 — illustrative)*:
• •Rear extension to a house in Hackney: 35m² GIA
• •MCIL2 rate: £60/m² (Rest of London zone)
• •Borough CIL rate (Hackney, residential, applicable zone): £200/m²
• •Total CIL rate: £60 + £200 = £260/m²
• •Net additional floorspace: 35m² (no demolition)
• •Indicative CIL charge (before index adjustment): 35 × £260 = £9,100
• •After BCIS TPI index adjustment (approximately 1.3 factor in 2025 vs. 2019 schedule date): £9,100 × 1.3 ≈ £11,830

*The index adjustment is applied by the Borough's CIL officer — the exact figure is confirmed in the CIL Liability Notice issued after planning permission is granted.*

**Critical rule: CIL exemptions are NOT automatic — they must be claimed BEFORE development commences**:

This is the single most important CIL rule for London homeowners to understand. CIL exemptions and reliefs are available — but they do not apply automatically just because you qualify. You must submit the correct claim forms to the London Borough BEFORE the commencement of development. If development commences before the exemption is claimed, the exemption is lost and the full CIL is payable, plus surcharges. 'Commencement of development' in CIL law includes ANY preparatory works on site — not just structural groundworks. Breaking ground, demolishing any structure, or commencing any excavation constitutes commencement.

**Exemption 1: Self-build principal private residence exemption**:

*Who qualifies*: an individual (not a company) building a new dwelling to occupy as their principal private residence.

*What it exempts*: 100% of the CIL liability for the new dwelling (MCIL2 and Borough CIL where applicable).

• *Conditions*:
• •The applicant must complete Form 7 (CIL Self Build Exemption Claim — Part 1) and submit it to the collecting authority BEFORE commencement
• •After completion, complete Form 8 (CIL Self Build Exemption Claim — Part 2) and submit it within 6 months of first occupying the dwelling
• •Occupy the dwelling as a principal private residence for a minimum of 3 years after completion
• •If sold within 3 years: the CIL becomes payable at the time of sale (with any index adjustment), plus a surcharge — the exemption is clawed back
• •The clawback runs with the property — a buyer within the 3-year period inherits the clawback risk

*Common pitfall*: Form 7 MUST be submitted before commencement. Submitting Form 7 after starting any site works, even minor demolition, results in the loss of the exemption.

**Exemption 2: Residential extension relief (£0 CIL for qualifying extensions)**:

*Who qualifies*: a householder extending their existing principal private residence by less than 100m² additional GIA.

*What it exempts*: 100% of the CIL liability for the extension (MCIL2 and Borough CIL where applicable).

• *Conditions*:
• •Submit Form 6 (Residential Extension Exemption Claim) to the collecting authority BEFORE commencement
• •The extension must be to the person's own home (principal private residence — not a rental property or investment property)
• •The additional floorspace must be less than 100m² GIA
• •Extensions of 100m² or more of additional GIA are CIL-liable

*Critical point for London homeowners*: the residential extension relief is one of the most common and valuable CIL exemptions — but it is frequently missed because homeowners (and even some contractors) do not know it exists or fail to claim it before work starts. For a 45m² rear extension in a London Borough with Borough CIL at £200/m² + MCIL2 at £60/m², the unclaimed CIL liability could be 45 × £260 × 1.3 ≈ £15,210 — a significant sum that could be fully exempted if Form 6 is submitted before work commences.

**Exemption 3: Social housing relief**:

Affordable housing (social rented; shared ownership; affordable rent) provided as part of a development scheme is exempt from CIL. This relief is relevant to developers of larger residential schemes but not to most London householder applications.

**Exemption 4: Charitable development exemption**:

Development by a charitable institution for charitable purposes is exempt from CIL. This exemption requires the developing body to be a registered charity and the development to be for qualifying charitable purposes.

**What is NOT exempt from CIL**:

• •Extensions to a landlord's rental property (even if the landlord also lives in the same building): only extensions to the applicant's own principal private residence qualify for Form 6 relief
• •Extensions of 100m² or more
• •New dwellings built for sale or investment (not for personal occupation as a principal private residence)
• •Commercial development (retail; offices; industrial) — unless a specific charitable or social housing relief applies

**Mezzanine floors — the CIL trap for commercial conversions**:

A common CIL trap for commercial premises in London: installing a mezzanine floor adds new GIA to the building and triggers CIL on the additional floorspace — even if no planning permission is required (where the mezzanine is permitted development). Where planning permission is required and granted, the CIL Liability Notice is issued automatically. Where no planning permission is required, the CIL liability is still triggered — the developer must notify the collecting authority of the chargeable development before commencing.

**The CIL process after planning permission is granted**:

• *1. CIL Liability Notice*:
• After planning permission is granted, the Borough's CIL officer issues a CIL Liability Notice to the applicant. The Liability Notice states:
• •The amount of CIL payable (in nominal and index-adjusted terms)
• •The chargeable floorspace (GIA)
• •The CIL rate applied
• •The payment due dates
• •Information on how to apply for exemption or relief

*The Liability Notice is NOT a demand for immediate payment — it is a notice of the total liability. The CIL becomes payable at the point of commencement of development.*

*2. Assumption of liability*: Before development commences, the person intending to commence the development must submit Form 2 (Assumption of Liability) to the collecting authority. This form formally identifies the person liable for the CIL charge. If Form 2 is not submitted before commencement, the liability defaults to the landowner.

*3. Commencement notice (Form 6 or Form 7 for exemptions; otherwise notice of commencement)*: For non-exempt development, the developer must notify the collecting authority before commencement (Regulation 67 notice). For exempt development, Form 6 (extension) or Form 7 (self-build) must have been submitted before commencement — and the exemption confirmed by the authority before commencement occurs.

*4. Payment*: CIL payment is typically due within 60 days of the date of commencement of development. Some London Boroughs allow payment by instalment — check the Borough's payment policy. MCIL2 and Borough CIL are paid to different collecting authorities — the Borough collects Borough CIL; the GLA is the collecting authority for MCIL2 (though the Borough often acts as the agent for MCIL2 collection in practice).

**CIL surcharges for non-compliance**:

The CIL regulations provide for surcharges where the developer fails to comply with the procedural requirements:

| Non-compliance | Surcharge | |---|---| | Commencement without submitting Form 2 (Assumption of Liability) | 20% of the CIL liability | | Failure to notify the collecting authority of commencement | 20% of the CIL liability | | Late payment of CIL | Up to 5% of the CIL liability per year of delay; plus interest at the base rate + 2% | | Failure to submit Form 7 Part 2 for self-build exemption within 6 months of first occupying | Loss of exemption; full CIL + surcharges payable | | Carrying out development before an exemption is confirmed | Loss of exemption; full CIL + surcharges payable |

*Note: the surcharges are in addition to the underlying CIL liability — they can significantly increase the total cost.*

**CIL appeals**:

The CIL calculation (including the index adjustment and the net chargeable floorspace) can be queried. A formal CIL appeal can be made to the Valuation Office Agency (VOA) within 28 days of the issue of the CIL Liability Notice (for a review of the calculation). A further appeal to the Planning Inspectorate can be made within 60 days of the VOA's decision.

**Practical CIL checklist for a London extension project**:

1. After planning permission is granted, check the CIL Liability Notice to confirm the chargeable amount 2. If the extension is to your own home (principal private residence) and less than 100m² additional GIA, complete Form 6 and submit it to the Borough IMMEDIATELY — before ANY site works commence 3. Also submit Form 2 (Assumption of Liability) before commencement 4. Ensure the contractor does not begin any site works (including demolition, site clearance, or excavation) until the exemption has been confirmed and all required forms submitted 5. After any exempt self-build project, complete Form 8 within 6 months of first occupying the dwelling and ensure the property is occupied as a principal private residence for at least 3 years 6. If in any doubt about the CIL position — rates; exemptions; commencement rules — consult a planning consultant or the Borough's CIL officer before commencing work