Business
Do not ignore this potential new levy, farmers are warned
13th January 2012
The farming community must pay careful attention to changes in the community infrastructure levy (CIL) next year to avoid potentially serious damage to the rural economy.
That is the warning from rural land use expert Simon Pallett, a Newbury-based partner at national property consultancy Carter Jonas, who fears farmers could face excessive charges linked to planning permissions that deter them from developing their businesses, inducing a knock-on effect in the wider economy.
Changes to the levy were first proposed by the outgoing Labour government and were then incorporated into the Coalition’s Localism Bill, which has now gained Royal Assent. CIL will pay for improvements to local infrastructure and spreads the costs across all planning permissions that create a new total floor area of 100 square metres, or more, of gross internal floor space, or involve the creation of additional dwellings, even when that is below 100 square metres. Like-for-like replacement of existing buildings avoids CIL.
Many farm buildings have no effect on local amenities and make no demand on publicly-funded services and it may be unfair to insist farmers pay a levy which could be regarded as a tax on virtually all development if proposed schemes with no local impact were still made subject to CIL, suggests Mr Pallett.
The costs could also make new agricultural buildings non-viable and this would affect building suppliers as well as agricultural equipment and feed suppliers, seriously undermining the wider economy and placing jobs in the urban economy at risk.
“We contacted 18 local authorities in central southern England,” said Mr Pallett. “The South Downs National Park Authority (SDNPA) indicates it will make no charge for agricultural buildings but CIL will apply to equestrian schemes. All of the other responses propose consultations over the coming 12 months on how the levy should be imposed.
“The Government had already said that buildings for charitable uses and social housing should be exempt but there is provision for other exemptions at the discretion of each authority although these can later be cancelled. The situation has the potential to be very confusing.”
Government guidelines state: “Most buildings that people normally use will be liable to pay the levy. But buildings into which people do not normally go and buildings into which people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery, will not be liable to pay the levy.”
“I have heard some interpretations that only buildings for such things as pumping or generating stations would be exempt but purely agricultural buildings could also fall within this scope and that is the view the SDNPA is taking,” adds Mr Pallett. “It bolsters the argument for exemption significantly.
“The farming community must not be complacent. Local authorities can decide the amount of CIL and how it is applied. Farmers should be aware of local consultations and make their voices heard either through CLA, the NFU, or personal contact with councillors and officials. So far, we have only found one council – not in the south – that agrees with SDNPA by exempting agricultural buildings but it points towards the policy others should adopt.
“Where CIL is imposed on farm buildings, the levy can be paid in kind. This could mean a land swap for an affordable housing scheme as payment for the levy.
“If farmers hold back in case land can be used in a later CIL swap this could potentially restrict the availability of land for much-needed housing schemes that help youngsters stay in their home communities.”
That is the warning from rural land use expert Simon Pallett, a Newbury-based partner at national property consultancy Carter Jonas, who fears farmers could face excessive charges linked to planning permissions that deter them from developing their businesses, inducing a knock-on effect in the wider economy.
Changes to the levy were first proposed by the outgoing Labour government and were then incorporated into the Coalition’s Localism Bill, which has now gained Royal Assent. CIL will pay for improvements to local infrastructure and spreads the costs across all planning permissions that create a new total floor area of 100 square metres, or more, of gross internal floor space, or involve the creation of additional dwellings, even when that is below 100 square metres. Like-for-like replacement of existing buildings avoids CIL.
Many farm buildings have no effect on local amenities and make no demand on publicly-funded services and it may be unfair to insist farmers pay a levy which could be regarded as a tax on virtually all development if proposed schemes with no local impact were still made subject to CIL, suggests Mr Pallett.
The costs could also make new agricultural buildings non-viable and this would affect building suppliers as well as agricultural equipment and feed suppliers, seriously undermining the wider economy and placing jobs in the urban economy at risk.
“We contacted 18 local authorities in central southern England,” said Mr Pallett. “The South Downs National Park Authority (SDNPA) indicates it will make no charge for agricultural buildings but CIL will apply to equestrian schemes. All of the other responses propose consultations over the coming 12 months on how the levy should be imposed.
“The Government had already said that buildings for charitable uses and social housing should be exempt but there is provision for other exemptions at the discretion of each authority although these can later be cancelled. The situation has the potential to be very confusing.”
Government guidelines state: “Most buildings that people normally use will be liable to pay the levy. But buildings into which people do not normally go and buildings into which people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery, will not be liable to pay the levy.”
“I have heard some interpretations that only buildings for such things as pumping or generating stations would be exempt but purely agricultural buildings could also fall within this scope and that is the view the SDNPA is taking,” adds Mr Pallett. “It bolsters the argument for exemption significantly.
“The farming community must not be complacent. Local authorities can decide the amount of CIL and how it is applied. Farmers should be aware of local consultations and make their voices heard either through CLA, the NFU, or personal contact with councillors and officials. So far, we have only found one council – not in the south – that agrees with SDNPA by exempting agricultural buildings but it points towards the policy others should adopt.
“Where CIL is imposed on farm buildings, the levy can be paid in kind. This could mean a land swap for an affordable housing scheme as payment for the levy.
“If farmers hold back in case land can be used in a later CIL swap this could potentially restrict the availability of land for much-needed housing schemes that help youngsters stay in their home communities.”
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