UK Government Publishes Draft Regulations to Implement the Nature Restoration Levy

1. Introduction

In a bid to spur economic growth and reverse environmental decline, in 2025, the UK Government introduced a new approach to off-setting environmental harms caused by new housing and infrastructure development.

Until now, the approach had been to require developers, on a site-by-site basis, to calculate the environmental harm caused by their development and and either make off-site compensating provision or make an equivalent payment to the local authority. This was criticised both by developers and environmental activists for failing to halt environmental decline, whilst at the same time slowing—and sometimes halting—much-needed housing schemes.

By establishing the Nature Restoration Fund ("NRF") and the Nature Restoration Levy ("NRL"), the Government's new approach is to pool money raised from individual developments and deploy it to fund strategic interventions that are intended to provide a greater benefit than currently is achieved dealing with matters on an individual site- basis only.

Under this new framework, Natural England will prepare Environmental Delivery Plans ("EDPs") for particular geographic areas that identify specific environmental features (such as protected sites or species) likely to be affected by specified categories of development, and set out the conservation measures needed to offset those impacts.

Once these plans are adopted, developers may elect to pay the NRL—the amount of which will be set by Natural England at a rate sufficient to cover conservation costs without making development economically unviable—into the NRF, rather than undertaking bespoke on-site mitigation measures. Upon payment of the NRL, the developer's obligations under various

pieces of legislation aimed at protecting species and habitats are deemed discharged for the impacts covered by the EDP, and Natural England will assume responsibility for delivering the specified conservation measures using the pooled funds.

On 18 June 2026, the Government published the draft Nature Restoration Levy Regulations 2026 (the "Regulations") which set out the framework through which the NRL will work. These draft Regulations set out the process for managing liability under the NRL, who is liable, when liability arises, surcharges for non-compliance, what the NRL can be spent on and the appeals process.

In this Legal Update, we summarise the main features of the proposed regime and the next steps.

2. How the Nature Restoration Levy Works

As indicated above, the NRL will allow developers to pay into the NRF instead of delivering their own site-specific environmental mitigation. The key mechanics of the NRL, as set out both in the primary legislation and proposed in the draft Regulations, are as follows.

2.1 Who is Liable?

In general the NRL is voluntary. This means a developer can elect either to pay it or to carry out site specific mitigation. So, as a general rule, developers will still need to carry out an assessment of which option is the more advantageous for them—and this, of course, means that the cost and time savings envisaged by the introduction of the scheme are somewhat reduced.

However, the legislation also allows Natural England to make the payment of the NRL mandatory in relation to particular types of development and environmental impacts. In addition, developers can request to be included in the EDP.

Once an EDP has been adopted, developers can request to pay the NRL; if this is accepted by Natural England, the developer is then committed to pay it.

Under the draft Regulations, once a request to pay has been accepted then an obligation arises on the local planning authority to attach a condition to the planning permission to the effect that development may not be commenced until the NRL has been paid (or, where the NRL is to be paid in instalments—see below—the first instalment has been paid).

Once a condition has been added to a planning permission, then in addition to the developer being obliged to pay the NRL, any other person seeking to implement the permission is bound to pay it.

The draft Regulations provide for liability to be transferred to other persons (subject to following the correct process), but this approach cannot transfer liabilities that have already arisen.

Under draft Regulation 11, Natural England can authorise payment of the NRL by instalments, and this may be subsequently varied with the consent of all liable persons.

Once a liability to pay the NRL arises, Natural England issues a liability notice to every liable person setting out the amounts to be paid, when the amounts are payable and the consequences of non-compliance.

Liability to pay the NRL is a local land charge, and as such binds all the relevant landowners. As a rule, liability is joint and several, but draft Regulation 19 allows the liability to pay the NRL to be apportioned between owners based on the "materiality" of their land interest.

2.2 How is the Amount of the Levy Determined?

Under Part 3 of the draft Regulations, Natural England will set a charging schedule for a particular EDP. These will set out rates according to, amongst other things:

• Particular types and sizes of development;
• The costs of conservation measures;
• Viability of development;
• Other expected sources of funding for conservation measures; and
• Administrative expenses.

The charging schedule will also make provision for indexation.

2.3 What are the Consequences of Non-compliance?

Failure to pay the NRL once a liability arises will be a breach of planning condition (and, in practice, we can expect that for large developments the planning condition to be supplemented with various procedural obligations in a S106 agreement). So, the usual planning enforcement mechanisms will come into play.

In addition, Part 4 of the draft Regulations provide that Natural England may impose a surcharge, being the greater of £300 and 2% of the NRL amount. This can rise to 5% in certain circumstances.

There is also provision for interest to be payable on overdue amounts at a rate of 2.5% above the Bank of England base rate.

Ultimately, Natural England can issue a "stop notice" where there is an overdue amount, following the issue of a "warning notice" which will require payment within 28 days. The "stop notice" will set out the activities which are prohibited for the relevant development. Failure to comply with a "stop notice" can lead to a court injunction.

2.4 Are There Any Appeal Rights?

The draft Regulations provide an ability for extensive review of the amount of the NRL and more appeal rights. A liable person can ask Natural England for a review of an amount under a liability notice or any apportionment of liability, and they can then appeal to the Secretary of State but only on the ground that Natural England have incorrectly calculated the amount for the relevant development, or in respect of any apportionment that Natural England has incorrectly apportioned the liability.

Appeals can also be made against the imposition of a surcharge or a stop notice on wider grounds.

3. Next Steps

The Government has indicated that the draft Regulations, alongside related Regulations which flesh out the requirements for EDPs, will be laid before Parliament in the spring and summer of 2026. It is unlikely that the substance of these Regulations will change much (if at all) prior to their adoption.

As readers will see the draft Regulations are based on the regulatory model adopted for the Community Infrastructure Levy and, as practitioners will be aware, those Regulations have given rise to a great deal of case law, which will no doubt be relevant in the practical implementation of the Regulations.