20/11/2025
Building ConsultancyWhen planning a development in England, understanding your financial obligations to local infrastructure is essential. Two mechanisms govern these contributions: Section 106 Agreements and the Community Infrastructure Levy (CIL).
While both aim to ensure developments contribute to local services and infrastructure, they operate differently and apply in distinct circumstances. For property developers, landowners and businesses planning expansion, knowing which system applies to your project can significantly impact budgets, timelines and planning strategies.
This guide explains the key differences between Section 106 agreements and CIL, helping you navigate these obligations with confidence.
What is a Section 106 agreement?
A Section 106 agreement is a legally binding contract between developers and local authorities in England. Named after Section 106 of the Town and Country Planning Act 1990, these agreements ensure developments contribute to the infrastructure and services needed to support them.
Section 106 obligations are negotiated on a case-by-case basis during the planning process. They can require developers to:
- Provide affordable housing within the development
- Contribute funding towards local schools, healthcare facilities or transport improvements
- Create or maintain public spaces and recreational areas
- Implement measures to mitigate the development's environmental impact
The specific requirements vary depending on the development's scale, location and anticipated impact on local services.
What is the Community Infrastructure Levy?
The Community Infrastructure Levy is a standardised charge that local authorities can impose on new developments. Introduced through the Planning Act 2008, CIL allows councils to set fixed rates based on the size and type of development.
Unlike Section 106 agreements, CIL charges are:
- Non-negotiable and calculated using published rate schedules
- Applied per square metre of new floor space
- Collected to fund a broad range of infrastructure projects across the local authority area
- Not tied to site-specific requirements
Local authorities publish CIL charging schedules that specify rates for different development types and zones within their jurisdiction. These rates are subject to regular reviews and public consultation.
Key differences between Section 106 agreements and CIL
Negotiation and flexibility
Section 106 agreements are negotiated between developers and planning authorities for each development. This allows for flexibility based on site-specific circumstances and viability considerations.
CIL, however, is non-negotiable. Once a local authority adopts a CIL charging schedule, developers must pay the specified rate unless they qualify for specific exemptions or relief.
Purpose and scope
Section 106 agreements address the direct impact of a specific development. Contributions must be necessary to make the development acceptable in planning terms and directly related to the proposed project.
CIL funds infrastructure across a wider area. Local authorities can use CIL receipts to support any infrastructure project identified in their Infrastructure Delivery Plan, even if not directly related to the paying development.
Calculation methods
Section 106 contributions are calculated based on the development's anticipated impact. For instance, a residential development might contribute towards school places based on the expected number of children from new households.
CIL is calculated using a straightforward formula: the development's net additional floor space multiplied by the relevant CIL rate, with adjustments for inflation and any applicable relief.
Payment timing
Section 106 obligations can include both financial contributions and non-monetary requirements. Payment schedules are negotiated and may be phased throughout the development process.
CIL typically becomes payable within 60 days of commencing development, though payment plans can sometimes be arranged with the local authority.
Can Section 106 and CIL apply to the same development?
Yes, developments can be subject to both Section 106 agreements and CIL. However, regulations prevent "double-charging" for the same infrastructure.
CIL Regulation 122 stipulates that Section 106 agreements can only require contributions that are:
- Necessary to make the development acceptable in planning terms
- Directly related to the development
- Fairly and reasonably related in scale and kind to the development
After CIL introduction, Section 106 agreements typically focus on site-specific matters such as affordable housing, while CIL addresses broader infrastructure funding. Local authorities must demonstrate how they avoid requiring duplicate contributions.
Which developments are exempt from CIL?
Certain development types may qualify for CIL exemptions or relief, including:
- Self-build housing projects
- Affordable housing provided by registered providers
- Buildings used for charitable purposes
- Residential extensions and annexes below specified thresholds
- Developments in areas where the local authority has not adopted CIL
Section 106 agreements can still apply to exempt developments if they meet the criteria outlined in the planning regulations.
Claiming CIL relief
If your development qualifies for relief, you must submit the appropriate forms to your local authority before commencing work. Missing these deadlines typically results in forfeiting the relief entitlement.
How do local authorities decide between Section 106 and CIL?
Not all local authorities have adopted CIL. Those that have not continue to rely solely on Section 106 agreements to secure developer contributions.
Where CIL is in place, local authorities typically use it for general infrastructure funding while reserving Section 106 for:
- Affordable housing requirements
- Site-specific highway improvements
- Public space provision within the development
- Employment and training initiatives
- Environmental mitigation measures
Local planning policies outline how authorities apply both mechanisms, providing transparency for developers during pre-application discussions.
The Infrastructure Levy: What changes are coming?
The Levelling Up and Regeneration Act 2023 introduces the Infrastructure Levy, which the government intends to replace both Section 106 agreements and CIL over the coming years.
The Infrastructure Levy will:
- Calculate contributions as a percentage of development value rather than fixed rates per square metre
- Provide greater transparency and predictability for developers
- Maintain requirements for affordable housing delivery
- Simplify the overall system for securing developer contributions
The government plans to phase in the Infrastructure Levy gradually, with test and learn areas implementing the new system first. Existing CIL and Section 106 arrangements will continue operating until local authorities transition to the new regime.
Contact us to navigate developer contributions with expert support
Understanding your obligations under Section 106 agreements and CIL is essential for successful development planning. Miscalculating contributions, missing exemption deadlines or failing to negotiate effectively can significantly impact project viability.
Our team provides comprehensive support for developers navigating these requirements. We can assist with viability assessments, negotiations with local authorities and ensuring compliance throughout the planning process.
Please call 0800 051 2593 or complete the form below to discuss your development plans. You can also explore our news and insights for more information about planning and development topics.
