The Infrastructure Levy: What Replaces CIL and Why It Matters for Your Next Scheme

The Community Infrastructure Levy has been part of the English planning system since 2010, and for most developers it is a familiar — if unwelcome — line in the development appraisal. CIL charges are set by local authorities at a fixed rate per square metre of new development, collected at commencement, and used to fund local infrastructure. The system is imperfect: rates vary wildly between authorities, the charge bears no relationship to the actual value of the development, and viability complaints are common. The government has decided to replace it.

The Levelling Up and Regeneration Act 2023 includes provisions for a new Infrastructure Levy that will replace CIL in England. The key difference is fundamental: the new levy will be charged as a percentage of the gross development value of the completed scheme, not as a flat rate per square metre. This means the charge scales with the actual value of what is built, rather than being a blunt per-area calculation that treats a luxury penthouse and a studio flat identically.

The implementation timeline is deliberately gradual. A test-and-learn process began in 2025 with a small number of volunteer local authorities. Gradual expansion to more authorities is planned from 2027, with a full national rollout expected from around 2029. Until the Infrastructure Levy is implemented in your area, the existing CIL and Section 106 regime continues to apply. There is no cliff edge — the transition will be phased over several years.

For developers, the GDV-based approach has significant implications for viability. Under CIL, you know your liability at the point of planning permission — it is a fixed charge based on your consented floorspace. Under the Infrastructure Levy, your liability is linked to the final value of the completed development, which means it fluctuates with market conditions. If values rise between permission and completion, your levy liability increases. If values fall, it decreases. This introduces a new variable into development appraisals that is harder to model with certainty.

The scope of what the levy can fund is broader than CIL. The Infrastructure Levy can be used for affordable housing delivery, facilities for emergency services, improvements to the natural environment, and climate change mitigation — in addition to the roads, schools, and community facilities that CIL currently funds. This is significant because it means the Infrastructure Levy is intended to absorb some of the functions currently performed by Section 106 agreements, particularly affordable housing contributions.

The interaction with Section 106 during the transition is one of the most complex aspects. The government has stated that both CIL and Section 106 will continue to operate in a charging authority's area until the Infrastructure Levy is formally implemented there. Sites permitted before the levy takes effect will remain subject to CIL and Section 106. This creates a period where developers may face uncertainty about which regime applies to their scheme — particularly for phased developments that span the transition.

There is also a floor mechanism designed to protect against the levy making development unviable. The levy will only be charged on value above a threshold, ensuring that the charge does not push schemes into negative viability. The government has indicated that the threshold will be set to reflect build costs and a reasonable developer return, but the exact calibration will be determined through the test-and-learn phase.

For developers operating across multiple local authority areas, the transition creates a patchwork of charging regimes. Some authorities will adopt the Infrastructure Levy early, others will remain on CIL for several years. This makes cross-authority viability comparison more complex and increases the importance of accurate, site-specific cost modelling.

What does this mean practically? For schemes in the immediate pipeline (2026-2028), CIL is almost certainly the regime that applies. Your CIL liability is known and should be modelled in your appraisal. For schemes in early feasibility that will not reach planning permission until 2028-2030, you need to consider the possibility that the Infrastructure Levy may apply instead — and model the GDV-based charge as a sensitivity in your appraisal. For land purchases, understanding the likely levy regime is essential for calculating your residual land value accurately.

Our CIL Liability Assessment calculates your current CIL exposure, identifies applicable exemptions and relief, and models the net charge for your scheme. For developers also wanting to understand how the Infrastructure Levy transition might affect future viability, our Development Finance Summary models the full cost stack — including CIL, Section 106, BNG, the Building Safety Levy, and sensitivity scenarios for the Infrastructure Levy — giving you a comprehensive picture of developer contributions across both regimes.