Extension tax to help plug council cash gap

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A levy on residential and shop new builds and large extensions is set to help a council pay for community projects in Dacorum.

The Community Infrastructure Levy (CIL) could charge up to £250 per square metre (psm) on developments from March 2014.

Dacorum Borough Council’s Cabinet, at a meeting on Tuesday, agreed to a public consulation on proposed charges. It won’t apply to small residential extensions.

Under the plans, Dacorum would be split into three zones. Zone 1 would be Berkhamsted and surrounding areas, Zone 3 would be Hemel Hempstead and Markyate and Zone 2 would be everywhere else.

Zone 1 would have the highest rate for residential development, £250 psm and Zone 3 the lowest at £100 psm.

Retirement housing would be charged at £125 psm and large shops £200 psm. Other developments would be taxed nothing.

Councillor Terry Douris, Dacorum Borough Council’s planning and regeneration supremo, said: “The charge will apply to the next increase in floorspace. Developments of the same size will not have to pay CIL.”

The council believes the CIL could generate nearly £2.9million each year for things like roads, schools and urban spaces although the funding gap for such projects is put at more than £60million.

But Mr Douris added that it was important that the CIL wasn’t set too high as it might prevent developments happening.

Councils already have powers to charge large developments so-called section 106 contributions. But they must be for specific projects.

The new CIL will have to be examined independently and be passed by the full Dacorum Borough Council before being implemented.