Applying for CIL Exemption

by Mike Hardwick
10th October 2016

Of all the self-build topics I get asked about, the most prevalent is exemptions from taxes and levies, such as Section 106 (S106) agreements and the Community Infrastructure Levy (CIL). The S106 issue was resolved in May when the high court restored the government’s advice that projects of 10 homes or fewer with a cumulative floor area of no more than 1,000m2 should not be liable.

CIL immunity for self-builders is enshrined in law. However, I’m continuing to hear incredible stories of individuals doing their best to claim the exemption yet still being hit with enormous fines for failing to follow bureaucratic processes or missing technical details. In some cases, the bills have exceeded £50,000 and have effectively killed the project dead.

It’s bewildering that omitting a piece of paper, or getting over-enthusiastic and digging a hole without permission, can result in such eye-watering fees. The penalties are lacking in proportion to the wrongdoing committed and, in my opinion, are nothing short of scandalous.

Here’s what is supposed to happen. Upon making a planning application, you would advise your local authority prior to the commencement of development that you’re a self-builder and that you’re seeking to claim exemption from CIL. This is done by submitting part one of the Self-Build Exemption Claim Form, known as Form 7, which can be downloaded from the Planning Portal (www.planningportal.org.uk).

It’s a fairly simple document comprising details of your scheme and the plot, together with a simple declaration that you are a self-builder. Your local authority will advise whether or not it can grant CIL relief. Part two of this paperwork is submitted within six months of completion, along with proof of your self-build status (usually your VAT reclaim or mortgage details) and a declaration that if you sell within three years of completion, you will be liable to pay CIL.

There is a third document, Form 6, which serves as the commencement notice. If this isn’t submitted after you’ve received a decision on whether or not your local authority will grant relief from CIL, and before you begin any work on site – even digging a hole – then you will get hit by the levy.

It’s this part of the process that’s causing much of the grief. Another potential trap is people submitting details but in the wrong format, such as sending information via email rather than using the Planning Portal forms.

My view is that a project is a self-build or it isn’t. If CIL is due, then it must be paid. If it’s a self-build then CIL doesn’t apply – and that should be it. I don’t think it’s right to pounce and claim fees of tens of thousands of pounds based on a technicality or as the result of a legitimate oversight.

The powers that be will claim the rules are fair and, if followed to the letter, nobody should be penalised. That’s true, but we’re all fallible and minor lapses in the process shouldn’t lead to such disproportionate penalties.

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