Introduction: In the dynamic landscape of the construction industry, staying informed about regulatory requirements is crucial. One such aspect that employers need to be familiar with is the Construction Industry Training Board (CITB) Levy. This blog post aims to provide a comprehensive guide for employers engaged in construction activities, covering the basics, rates, exemptions, and the impact of the Construction Industry Scheme (CIS) on the levy.
- Applicability of the Levy: The CITB Levy applies to all employers primarily involved in construction industry activities. If construction activities constitute more than half of the total employees’ time, including subcontractors, the levy is mandatory.
- Levy Calculation: The amount of levy a company pays is based on its total wage bill, including both payroll employees and CIS subcontractors subject to deductions. The levy rates for the 2021-2023 period are confirmed at 0.35% for PAYE and 1.25% for Net CIS under the 2022 Levy Order.
- Exemptions and Reductions: Small employers may benefit from exemptions and reductions in the levy. Understanding the criteria for these exemptions is vital for eligible employers to optimise their levy obligations.
- CIS Subcontractors and Levy Impact: The Construction Industry Scheme (CIS), administered by HM Revenue and Customs (HMRC), plays a role in the CITB levy. Contractors deduct money from subcontractors’ payments and transfer it to HMRC. The CITB levy is calculated on payments to both payroll employees and CIS subcontractors subject to deductions.
- Gross Payment Status for CIS Subcontractors: CIS subcontractors have the option to apply for ‘gross payment status,’ allowing them to be paid without deductions. The CITB levy is not applied to subcontractors who receive gross payments.
- Purpose of the CITB Levy: The CITB Levy serves a critical role in supporting the construction industry by fostering a skilled, competent, and inclusive workforce. It is dedicated to addressing skills needs, promoting careers in construction, and ensuring high-quality apprenticeships.
- Utilisation of Levy Funds by CITB: CITB utilises levy funds to support training development through grants and funding, promote the construction industry as a desirable career choice, offer apprenticeships, and identify and address skills gaps across the sector.
Conclusion: Staying compliant with the CITB Levy is not only a legal obligation but also a strategic investment in the future of the construction industry. Employers must navigate the intricacies of levy calculations, exemptions, and the impact of the CIS to contribute to a skilled and thriving workforce in the construction sector.