Excluding self-build projects (and small sites) from the Community Infrastructure Levy (CIL) in tomorrow's budget would provide a boost to self-build and the construction sector.
The Chancellor may even scrap the CIL altogether and replace it with a tax on planning gain, which is much fairer than taxing development gain. The Community Infrastructure Levy (CIL) is a local tax on new development raised to provide funds towards local infrastructure projects such as roads and schools, which are required to meet the needs of the residents of large scale new housing developments.
CIL is eventually supposed to replace Section 106 Agreements between developers and Local Authorities, which currently do much the same thing. At present both the CIL and Section 106 Agreements are running in parallel. Whilst Section 106 Agreements were never (in my knowledge or experience) imposed on self-builders, some LAs do charge self-builders and extenders the CIL and it can result in an additional bill of many £1,000s on the commencement of a planning permission.
The tax is payable even though he uplift from the planning permission could have been made by the previous owner. As the CIL is optional, other LAs do not apply the tax to one off sites or home improvement projects such as extensions and the result is significant inequity across the UK. As an incentive to self-builders and home extenders, and to ensure fairness so that all homeowners are treated equally, the Chancellor should announce in the budget that homeowner projects, including self-build projects (or possibly all small sites under a certain number of units) are excluded from the CIL.
Alternatively, the CIL should be levied upon the granting of planning permission, not the commencement of the development, shifting the emphasis of taxation to fund local infrastructure from the self-builder/developer to the landowner who has benefited most from the planning gain. To ensure fairness, repeat applications, renewals, and applications for alterations would need to be excluded from the CIL. It is arguable that any tax on development (such as the CIL) eventually works its way down the chain and suppresses land values, so the landowner effectively suffers the tax burden anyway. This may be the case, but takes time and a perfect market, and this does not apply to sites that already have consent.