A closer look at the new Nature Restoration Fund regulations and guidance

This summer has seen the publication of new secondary legislation and guidance by the Government under the Planning and Infrastructure Act 2025 (PIA 2025) in relation to the Nature Restoration Fund (NRF), providing much-needed detail on how the new regime will operate in practice, and how it is intended to both facilitate nature recovery and deliver development.

Nature Restoration Levy Regulations

The Nature Restoration Levy Regulations 2026 came into force on 11 September 2026 and establish the detailed framework governing the operation of the Nature Restoration Levy (NRL). In particular, the Regulations address:

• Who is liable to pay the levy, when liability arises, and how a commitment to pay can be transferred, discharged or cancelled

• How Natural England must calculate, collect and administer levy payments, including the factors it must consider when setting charging schedules

• Requirements for levy funds to be ring-fenced

• Obligations on developers to notify Natural England of material changes to development proposals that could affect the amount of levy payable

• A range of enforcement powers available to Natural England, including surcharge, stop notice and debt recovery powers

• The review and appeal process applicable to the levy

See also: guidance on enforcement actions and appeals process.

Environmental Delivery Plans (Appropriate Prioritisation) Regulations

The Environmental Delivery Plans (Appropriate Prioritisation) Regulations 2026 introduce a provision for Natural England to apply a form of the mitigation hierarchy when preparing draft Environmental Delivery Plans (EDPs) under the PIA 2025 and considering any amendments to them. However, the requirement applies only where Natural England “consider it appropriate” to prioritise conservation measures in accordance with the hierarchy. In making that assessment, Natural England should “have regard to the extent to which [the conservation measures proposed] deliver value for money”. These caveats have been deliberately included by Government to allow the flexibility to depart from the normal mitigation hierarchy.

Although relatively brief, the Regulations provide some insight into how a hierarchy of compensatory measures will be incorporated into the EDP regime. It remains to be seen how key concepts such as “mitigation” and “compensation”, defined broadly in the Regulations, will be interpreted in practice, and whether they will be informed by existing case law and guidance developed under the Habitats Regulations regime. Given the flexibility built into the wording of the legislation, it does appear that Natural England and the Department for Environment, Food and Rural Affairs (Defra) will have a blank canvas to work with.

Guidance

September also saw the publication of five key pieces of guidance on the operation of the NRF and NRL. Three of the five documents were issued jointly by Defra, the Ministry of Housing, Communities and Local Government (MHCLG) and Natural England, which is notable given that the Government had confirmed during the passage of the Bill that the Secretary of State for Defra would ultimately be responsible for “making” an EDP rather than MHCLG.

This joint approach has already prompted renewed discussion in Parliament as to, in Baroness Coffey’s words, “who is really driving” the regime.

Overall improvement test guidance

Defra has published guidance setting out the Government’s view on how the overall improvement test (OIT) should be interpreted.

The OIT is the central legal test for the new EDP regime and must be applied both by Natural England when preparing an EDP and by the Secretary of State (for Environment, Food and Rural Affairs) when they “make” the EDP.

The test itself is set out in section 65(4) of the PIA 2025, which states the OIT is passed if “by the EDP end date, the effect of the conservation measures will materially outweigh the negative effect of the EDP development on the conservation status of each identified environmental feature”.

One of the key themes emerging from the guidance is that the OIT involves an exercise of “evaluative judgement”, with no fixed threshold for determining when conservation benefits “materially outweigh” harm. The guidance also makes clear that, when preparing or making an EDP, the focus is on whether the OIT will be met by the EDP end date, and that decision-makers do not need to attempt to predict the outcome of the separate midpoint assessment.

Penny Simpson, Partner and Head of Natural Capital Law, shares her initial thoughts.

Guidance for Natural England on securing conservation measures

Defra has published guidance setting out how Natural England should be securing conservation measures included within an EDP as part of the NRF.

The guidance makes clear that EDPs are intended to support the growth of the nature services markets by creating demand through the delivery of conservation measures. In particular, it explains that EDPs should help provide “certainty and confidence for suppliers” in the nature services sector, including ecological consultants, landowners and managers, habitats banks and environmental non-governmental organisations (eNGOs).

The guidance also reiterates the importance of learning lessons from the commercial approaches taken in the early EDPs to inform the development of future EDPs, an issue frequently discussed in parliamentary debates on the PIA 2025.

Further guidance

Defra, MHCLG and Natural England have published joint guidance for developers on:

• Using the nature restoration levy – this guidance provides a clearer explanation of how the Nature Restoration Levy Regulations 2026 will operate in practice, including when liability for the levy arises, how liability may be assumed, and the circumstances in which a commitment to pay the levy can be cancelled

• Understanding the Nature Restoration Fund – this guidance clarifies the scope of the NRF and explains how EDPs will interact with the wider range of environmental obligations that may apply to a development

• Nature restoration levy enforcement actions and appeals process – this guidance explains the various enforcement powers available to Natural England under the Nature Restoration Levy Regulations 2026, as well as the procedures for seeking a review of, and subsequently, appealing Natural England decisions relating to the calculation of the levy and the apportionment of levy liability