Chancellor Alistair Darling has announced that the Government is scrapping the Planning Gain Supplement (PGS) and replacing it with an alternative system.

The Government has proposed a planning charge, similar to the so-called roof tax already operated by councils such as Milton Keynes to replace the PGS (a tax on the uplift in value of land following a planning consent).

Yvette Cooper, housing minister, said: “These provisions will empower local authorities to apply standard planning charges for all new development in their areas to support infrastructure delivery.”

The charge will apply to both residential and commercial developments, and is expected to be a set amount per dwelling or per square metre of space. Payment will be made by the developer to the local authority. The tariff system will operate alongside section 106 agreements.

Planning charges will include contributions towards regional infrastructure. Cooper said the system would capture more planning gain, preserve incentives to develop and make the planning process simpler.