Infrastructure levy for Scotland: discussion paper

9 Summary proposal

The following summarises our initial thoughts as to how the ILS could operate, as set out in the previous sections. However, this is a proposal for discussion and we are keen to hear alternative views.

We propose:

8.1 Setting the payable amount

• The regulations will set out a formula for calculation of the ILS.
• The ILS will be charged as a set amount per square metre of development.
• Developments could be measured by Gross Internal Area or by external area.
• There are a range of arguments as to whether the area of existing buildings that are demolished or redeveloped should be discounted.
• The formula will include elements which local authorities will determine, which will give them flexibility over where the Levy will be applied and how much it will be. This might be done by applying the formula to average development values within zones which the local authority identifies.
• It is expected that the charge will be in the range of 1.5% to 3% of GDV.
• Local authorities would not be required to charge the ILS in all (or any) parts of their area.
• Local authorities will have discretion to waive or reduce the amount of the Levy where they believe it could inhibit development, taking into account other costs such as planning obligations.

8.2 What kinds of development should pay the Levy?

• The standard rate of the Levy will be for residential development.
• We are interested in views on whether commercial / industrial development should pay the Levy, how that might operate in different areas, and particularly whether renewable energy infrastructure and related development should be charged.
• If commercial / industrial development is charged, this should be at a different rate from residential development.
• We propose that residential institutions, householder development and self-build housing will be excluded from the Levy.
• There are more questions to be considered as to whether (some or all) affordable housing, purpose-built student accommodation, and very small developments should be excluded.
• Some exemptions could be at local authority discretion, others could apply nationally.
• There could also be exemptions for different types of developer.

8.3 When should the Levy be calculated, and paid?

• We are open to views on when the Levy should be calculated and paid; either at the beginning of development or at the end.
• Arrangements will need to be made for development that benefits from Permitted Development Rights and those for which the planning application is made to LLTNPA.

8.4 Who should be liable to pay?

• We propose that the landowner at the point of commencement of development will be liable for the Levy.
• Provision may be needed to prevent liability being passed on to homebuyers.

8.5 Appeal process

• The form of the appeal process will depend on choices made about the design of the Levy.

8.6 Penalties and enforcement

• A penalty fee will be payable if the Levy is not paid on time. We are interested in views on how this should be calculated and whether it should increase over time.
• It would be possible to enable local authorities to require development to stop if the Levy is not paid. Whether this is an effective sanction may depend on when the Levy is due to be paid.
• The regulations will provide that it is an offence to take steps to try to evade payment of the Levy, or reduce the amount required, by withholding information, providing false or misleading information or obstructing investigations. Local authorties will have powers to enter premises and seize items in order to investigate liability for the Levy.

8.7 What should the Levy be spent on?

• We do not consider that any changes are needed to the definition of infrastructure.
• The levy is to be spent on infrastructure identified in the LDP and NPF4, and in future through Regional Spatial Strategies, for which s.75 planning obligations are less suitable or where it is appropriate to gather contributions across a wider area.

8.8 Accounting for levy income and expenditure

• Local authorities will be required to report annually on the amount of infrastructure levy income collected and spent, what it has been spent on and predictions for future years.