A charitable case for relief
Exemptions from CIL are available but it’s advisable to check the details, says Mark Burrows, associate at Penningtons Solicitors
On 1 April, the mayor of London’s charging schedule for the community infrastructure levy took effect. Money raised by the mayor’s CIL is being ploughed into transport, in particular Crossrail. It is worthwhile noting the exemptions and reliefs available in the capital for certain charitable and social housing developments.
Charitable institutions (as defined in the CIL regulations) benefit from a full exemption from CIL liability, where the development is wholly or mainly used for charitable purposes. ‘Charitable purposes’ carry the same definition as under the Charities Act 2006.
The exemption does not apply, however, where the part of the development used for charitable purposes is jointly owned with a non-charitable institution. This is also the case if the charitable part is not occupied by or under the control of a charitable institution, or if the relief would constitute state aid.
CIL regulations state that an authority charging CIL can also provide for a discretionary relief for charitable institutions relating to development for investment purposes, but this discretionary relief has not been applied by the mayor.
In relation to social housing, there is relief for developments which wholly or partly comprise of ‘qualifying dwellings’. This includes assured tenancies let by a private registered provider of social housing, a registered social landlord or a local housing authority. It also includes shared ownership dwellings in most cases.
The relief for social homes is deducted from the CIL liability for the entire chargeable development. The regulations contain various
formulae for calculating this figure.
Making a claim
Importantly, both the charitable exemption and the social housing relief need to be claimed by written submission to the relevant authority (which in the case of the mayor’s CIL is the relevant London borough), which then needs to respond with notification of whether the relief has been granted. Both steps must be completed before the development commences, or the claimant’s eligibility ceases and the relief or exemption is lost. This contrasts with stamp duty land tax where relief is claimed after the date the tax becomes payable.
In addition, developers should be aware of a clawback provision. If there is a ‘disqualifying event’ within seven years of the commencement of development, the full charitable exemption, or, in the case of social housing relief, the difference between the qualifying amount before and after the event, must be paid to the relevant authority. For the charitable exemption, a disqualifying event would include where the owner of the interest ceases to be eligible or the whole of the interest is transferred to an ineligible person. Social housing relief will be lost when the home no longer meets the qualifying dwelling criteria.