Does it apply to you?
The levy applies only where the local planning authority has approved and published a charging schedule setting its rates. Your council's website will tell you whether it has one, and the schedule shows the rate for your type of development and location. Where the Mayor of London also charges, the borough collects the Mayor's charge with its own.
Development is chargeable if it adds 100 square metres or more of new gross internal floor area, or creates one or more dwellings of any size. Buildings people do not normally go into, buildings entered only to inspect or maintain plant, and structures that are not buildings are not chargeable. Neither is development with planning permission for a limited period.
The charge follows planning permission, so it can apply to development with permission under a development order, such as permitted development rights, as well as to development with a specific grant. In that case you send the council a notice of chargeable development before you start.
How the charge is worked out
The council multiplies the net new floor area by the rate in its charging schedule for that type of development and location, then adjusts the result for inflation. For example, 900 square metres at £200 a square metre starts at £180,000 before indexation.
The net area is the gross internal area of the new development less the floor space of existing buildings that are in use. A building counts as in use if part of it has been in lawful use for a continuous period of at least six months in the three years ending on the day permission first permits the development. Floor space in an in-use building that stays in place, or is demolished, comes off the chargeable area. If the council cannot tell whether a building was in use, it can treat it as not in use.
What to do before work starts
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Check the charging schedule
Find the rate for your development on your council's website and include the charge in your appraisal. If the council has no schedule, no charge arises, although it may still seek Section 106 contributions.
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Read the liability notice
After permission is granted the council issues a liability notice stating the chargeable amount and any exemption or relief granted. Check the area and rate against your plans.
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Assume liability
Send the council an assumption of liability notice (Form 2) before you start. If nobody assumes liability, it defaults to the landowners, who cannot use any instalment policy and owe the whole charge as soon as work starts, and the council can add a surcharge for each person liable.
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Claim any exemption or relief
Claims for self-build, annex, extension, charitable and social housing exemptions must be received and decided before you start.
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Send the commencement notice
Send Form 6 so that it reaches the council no later than the day before work starts, stating your intended start date. If your permission came from a development order, send a notice of chargeable development (Form 5) before you start instead.
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Pay when the demand notice says
The demand notice states the amount and due date. Where the council has no instalment policy, the whole charge is due 60 days after your intended start date. Pay on time: a payment more than 30 days late can attract a surcharge of 5% or £200, whichever is greater, repeated if it is still unpaid after six and twelve months.
Exemptions and relief
Minor development of under 100 square metres is exempt unless it creates a dwelling. Residential annexes and extensions, self-build homes, development by charities for charitable purposes and qualifying social housing can also be exempt or relieved, and some councils offer discretionary relief in exceptional circumstances. Apart from minor development, each has to be claimed and agreed before work starts and some carry a clawback period.
How the levy differs from Section 106
The levy is a set charge from a published schedule that you cannot negotiate, and it is payable whatever the site's particular impacts. A Section 106 agreement is a negotiated planning obligation that deals with the effects of one development. Both can apply to the same development.
Legal basis
Primary legislation and key regulations