CIL Indexation Update

Last month, the RICS published the annual Community Infrastructure Levy (CIL) index figure for 2024 – at 381, this is an increase of 7.32% from the previous year.

 

CIL is a non-negotiable charge local authorities can set on new developments in order raise funds to help fund infrastructure, facilities and services need to support new homes and businesses. In calculating the charges for the Levy, CIL Regulations require collecting authorities to apply an index of inflation to keep the levy responsive to market conditions and ensure that contributions can still meet the costs of necessary infrastructure.

 

In an effort to provide certainty on the level of indexation, the RICS publish an annual index around November, which is used by charging authorities for the preceding year. The index is based on the RICS Build Cost Information Service (BCIS) All-in Tnder Price Index (BCIS TPI) which considers building prices for the previous year.

 

Whilst there are signs that build cost inflation may be beginning to ease, labour costs are forecast to be the main driver of construction costs in the near term. However, the BCIS reported that build costs increased by 8.7% last year and were up over 20% since 2020 – this is reflected in the latest CIL index figure.

 

Planning applications within charging authorities which are approved after December 2023 will be required to pay the 2024 CIL indexation rates.  Most charging authorities publish their CIL rate summary (with indexation) for the preceding year in order to provide guidance for developers.

 

Should you have any queries or require further information then please do not hesitate to speak to Danielle Lawrence, Alex Hicken or James Farmer.