‘Payment in Kind’ and Community Infrastructure Levy Regulations Explained

The Community Infrastructure Levy (CIL) Regulations 2010 (as amended) address the concept of "payment in kind" in Regulations 73, 73A, and 73B. These sections allow charging authorities (such as local planning authorities) to accept infrastructure or land as payment in lieu of some or all of a developer's CIL liability.

Key provisions in the CIL Regulations

1. Can I pay CIL through land transfers?

Yes, it is possible to pay the Community Infrastructure Levy (CIL) through land transfers rather than a direct monetary payment. This arrangement is permitted under CIL regulations, which allow charging authorities to accept land as an alternative form of payment. However, such a transfer is only viable if the land is intended to support the delivery of infrastructure that helps mitigate the impact of the proposed development. For the land transfer to be valid, both the developer and the charging authority must reach an agreement on the land’s value. Once this value is established and accepted, it is credited against the developer’s CIL liability, effectively reducing or eliminating the monetary payment required.

2. Can I pay CIL with infrastructure?

Yes, developers can pay the Community Infrastructure Levy (CIL) by delivering physical infrastructure instead of making a monetary payment. This option, introduced through later amendments to the CIL regulations, allows developers to offer infrastructure—such as a school, road, or park—as a form of payment in kind. However, the infrastructure provided must be something that the CIL would have otherwise funded, ensuring it directly supports the community and mitigates the impact of the development. Importantly, both the developer and the charging authority must agree on the specific terms of the arrangement, including the type and value of the infrastructure. Once agreed, the assessed value of the infrastructure is then offset against the developer’s overall CIL liability.

3. What is the administrative process for accepting payment in kind?

The administrative process for accepting payment in kind under the Community Infrastructure Levy (CIL) is governed by Regulation 73B, which sets out specific requirements that must be followed. Firstly, the charging authority—typically the local council—must have a publicly available policy document stating that it is willing to accept infrastructure payments under Regulation 73. Without this formal declaration, payment in kind cannot proceed. Secondly, a formal written agreement must be entered into between the developer and the charging authority. This agreement outlines the terms under which the infrastructure or land will be provided in place of a monetary CIL payment. The authority also has a duty to ensure that the land or infrastructure offered meets the necessary criteria and is suitable to support the infrastructure objectives linked to the development. Finally, a valuation process must be undertaken to establish the fair market value of the land or infrastructure. This valuation is crucial, as it determines how much of the developer’s CIL liability is satisfied through the payment in kind.

Practical Application

These provisions are designed to:

1. Encourage Flexibility: Developers can deliver infrastructure directly, potentially speeding up its availability for the community.

2. Enhance Local Benefit: By accepting land or infrastructure, authorities can ensure contributions are closely aligned with local needs.

3. Reduce Financial Barriers: Payment in kind can ease developers' cash flow issues, particularly for large or complex projects.

Click here for more information on what the Community Infrastructure Levy is and how it operates.

CIL 'payment in kind' can reduce financial barriers to development