Community Infrastructure Levy Spending Rules: A Guide for Parish Councils and Local Groups
The community infrastructure levy spending rules decide how money raised from new housing and commercial development is converted into playgrounds, footpaths, bus shelters and repaired roofs. For anyone active in local life, the community infrastructure levy spending rules are far less abstract than they sound, because a slice of every charge lands with parish and town councils to spend close to home. A district may collect £1.2m in a strong year and pass £180,000 outward as the neighbourhood portion. That money has a deadline, a reporting trail and a definition of eligible infrastructure that is broader than most councillors expect. This guide sets out who holds the funds, what percentage moves where, which projects qualify, how decisions must be minuted, and what happens when cash sits unspent for too long. It also covers the practical questions that trip up small councils, from match funding to VAT.
How the levy is charged and where the money goes
The levy is a fixed charge per square metre of net additional floorspace, set out in a charging schedule adopted by the district, borough or unitary authority. Rates vary enormously between places. A rural district might charge £20 per square metre on housing, while parts of inner London exceed £400 before the Mayoral levy is added on top.
Collection sits with the charging authority, which may keep up to 5% for administration. The remainder divides into a strategic pot for larger infrastructure such as school expansions, junction improvements and flood defences, and a neighbourhood portion transferred to parish and town councils in two instalments each year, usually April and October.
That division is the core of the community infrastructure levy spending rules. Where a made neighbourhood plan covers the area, the local share rises from 15% to 25% and the annual ceiling falls away entirely. Without a plan, the parish receives 15%, capped at £100 per council tax dwelling each year.
The neighbourhood portion at a glance
The cap bites hardest in small villages. A parish of 400 dwellings can receive no more than £40,000 in a year without a neighbourhood plan, however much building work takes place around it. Preparing a plan therefore pays for itself quickly in growth areas, and grant support towards the cost is normally available.
| Situation | Local share | Annual cap |
|---|---|---|
| Parished area, no neighbourhood plan | 15% | £100 per council tax dwelling |
| Parished area, made neighbourhood plan | 25% | None |
| Unparished area, no plan | 15% retained and spent after consultation | £100 per dwelling equivalent |
| Unparished area, made plan | 25% retained and spent after consultation | None |
| Administration by charging authority | Up to 5% | Not applicable |
What the levy can legally fund
Regulations define infrastructure broadly: roads and transport, flood defences, schools and education facilities, medical facilities, sporting and recreational facilities, and open spaces. The charging authority applies that list to strategic projects. Parish councils enjoy a wider test, covering anything that addresses the demands development places on their area.
That wider wording is why village halls, allotments, play equipment, CCTV columns, defibrillators and bus shelters routinely qualify. It is also why a parish can fund some maintenance where the strategic pot cannot, provided the spend genuinely relates to growth pressures and the reasoning is properly evidenced in the minutes.
Exclusions still matter. Affordable housing is normally delivered through section 106 agreements rather than the levy, and no single item may be double funded from both sources. Ordinary running costs, staff salaries and routine grass cutting sit outside the definition, whatever local enthusiasm exists for funding them.
Community projects that qualify in practice
Village halls absorb the largest share. A parish might commit £25,000 to rewiring, insulation or an accessible toilet, work that holds the village hall hire cost UK committees quote at roughly £8 to £15 an hour, rather than the £30 or more a commercial venue would charge for the same slot.
Green projects cost less than most councillors assume. Starting a community garden UK planners will happily support might mean £4,000 for raised beds, a water butt, a shed and fencing. Add a socket and a laminated community fridge how it works notice on the door, and surplus produce reaches households the same day.
Levy money cannot pay for food itself, but it can pay for the building around it. A refurbished side room lets a church host sessions, while a noticeboard explaining how to volunteer at food bank rotas fills the gaps in the roster. The UK food bank referral process still runs through vouchers issued by professionals.
A quick eligibility checklist
- Capital works on community buildings: a village hall roof, a new heating system or step-free access
- Play equipment, skate parks and outdoor gym kit, typically £15,000 to £60,000 per installation
- Traffic calming, dropped kerbs, benches, bus shelters and replacement street lighting columns
- Signage and starter packs that answer the neighbourhood watch scheme how to start question
- Allotment infrastructure, tree planting and pond restoration on land the council controls
Decisions, meetings and keeping the record straight
Spending decisions belong to the council, not the clerk or the chair acting alone. Parish council meeting rules UK legislation sets out require three clear days notice, a published agenda, a quorum of three members or one third, and minutes recording the resolution and the exact sum committed.
Consultation strengthens every decision. A summer engagement stall costs almost nothing when it piggybacks on existing plans for how to run a village fete, and a printed shortlist with indicative costs produces far sharper feedback than an open invitation for ideas from a blank page.
Volunteer capacity decides whether projects survive their first winter. The same noticeboard that explains how to become a school governor can recruit hall trustees and garden coordinators. Groups asking how to set up a charity generally register as a charitable incorporated organisation once annual income passes £5,000.
Deadlines, reporting and the risk of clawback
The community infrastructure levy spending rules give parishes five years from receipt to spend each instalment. Miss that window and the charging authority may serve a notice to recover the funds, then spend them elsewhere in the same area. Recovery is discretionary, but authorities use it more readily than they once did.
Reporting is annual and public. Every parish that received levy income must publish a report by 31 December covering the previous financial year: opening balance, receipts, spending broken down by item, and the amount carried forward. A single-page PDF on the council website satisfies the requirement comfortably.
Charging authorities publish an infrastructure funding statement on the same timetable, listing receipts, allocations and the projects they intend to fund. Reading it before you set local priorities avoids duplication, and it sometimes reveals a strategic scheme that your £30,000 could unlock as match funding.
Partnership stretches the money further than any council budget alone. Voluntary organisations bring volunteers, premises and trading income. Anyone who has browsed the best charity shops in London recognises the model, since donating clothes to charity UK high streets rely on funds frontline services that capital grants can never sustain by themselves.
How do parish councils decide which projects to fund?
Decisions belong to the full council at a properly convened meeting. Most parishes run an annual cycle: an autumn call for proposals, a winter shortlist with indicative costings, and a spring resolution tied to the budget and precept. Strong bids demonstrate a capital purpose, a link to development pressure in the area, evidence of demand, at least two quotes, and a credible plan for ongoing maintenance. Councillors must declare interests before voting, particularly where they are also hall trustees or club officers. Record the sum, the project and the reasoning in the minutes, because that entry becomes both your audit evidence and your answer if a resident challenges the choice later.
Is it possible to spend the neighbourhood portion on charities and volunteer groups?
Yes, provided the council retains control of the purpose and the resulting asset. Levy money is council expenditure rather than a grant scheme, so the safest route is a formal funding agreement: the council buys the boiler, the kitchen or the accessible ramp, and the voluntary group operates the building under a lease or licence. Clawback clauses protect the investment if the group folds or the use changes within, say, ten years. Revenue support such as wages, food stock or rent generally fails the test. If a group is not yet constituted, ask it to adopt a model constitution or register formally before any money moves.
What happens if the neighbourhood portion is not spent in five years?
The charging authority can serve a recovery notice and take the unspent balance back, then spend it on infrastructure within or near the same parish. The five-year clock runs separately for each instalment, so keep a simple ledger showing the date received, the amount and the resulting deadline. Committed but unspent funds are not automatically safe, which is why councils should formally resolve to allocate money to a named project and minute that decision. If a scheme stalls, reallocate early rather than hoping it recovers. Publishing the annual report on time also demonstrates good faith, and few authorities then push to claw anything back.
