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Do I have to register with the CITB? Everything you need to know about the CITB Levy
If you operate a company within the construction industry, it's essential to understand how the Construction Industry Training Board (CITB) and the CITB Levy could impact your business. Depending on the size of your operation, you could find yourself hit with a bill for tens of thousands of pounds every year.
We've pulled together some of the most common questions that our clients ask.
Who are the Construction Industry Training Board (CITB)?
The Construction Industry Training Board (CITB) is an industrial training board. They focus on promoting vocational training in the construction industry.
What is CITB Levy?
The CITB Levy is an annual payment made by employers/contractors to support reinvestment into the construction industry. It allows companies to access grants to support the delivery of apprenticeships or improving the skills of its existing workforce.
Any company that is registered with the CITB must pay the levy, so long as the total amount they pay their employees and subcontractors is greater than £80k.
Why does CITB Levy exist?
The CITB Levy was created to help make sure the construction industry has the skills it needs.
There are three key priorities for the CITB levy, all aimed at making sure that the right skills are available both now and in the future:
- Standards and qualifications
- Training and development
Is CITB Levy a legal requirement?
According to CITB:
“Employers who are engaged wholly or mainly in construction industry activities are required to complete a Levy Return. If we do not receive your Levy Return, we will estimate how much you must pay. If you fail to return it by the due date, we reserve the right to take legal action in accordance with the Industrial Training Act 1982, s6(5).”
It isn’t always clear whether a business falls entirely under the CITB levy, however.
For example, if the Main Contractor is involved in construction work, then it is clear that the CITB Levy applies.
However, other businesses carry out work on behalf of the Main Contractor, such as interior furnishings for example, that are not quite so clear.
Who pays CITB Levy?
The CITB levy applies to your business if the majority of your work falls within the construction industry. If this is the case, you are required by law to register with CITB.
If you pay less than £80k each year on the wages/payments of your PAYE employees and CIS-registered operatives, you won’t need to pay the Levy.
For Government guidance about activities considered to fall within the construction industry, read this scope order:
How does the CITB Levy work?
Once an employer/contractor is registered with CITB, they will receive a Levy Return form every spring. This must be completed and returned each year, and the amount that the company must pay is calculated.
How much is the CITB levy?
The amount that your business will pay depends on the total amount you pay employees on your payroll and the deductions you make for your subcontractors on the Construction Industry Scheme (CIS).
The rates are:
- 0.35% on total payments to all employees on your payroll
- 1.25% on Construction Industry Scheme (CIS) subcontractors
Can I offset my labour only suppliers against my CITB fees?
Not anymore, since tax year 15/16, the way the levy is calculated has changed (see above). This means an employer can no longer offset labour-only payments against CITB levy fees.
CITB Levy calculator
We've created a simple levy assessment calculator will help you work out precisely what you’ll pay in 2020 for the tax year 2018-2019 tax year.
Please remember that this is only a guide and confirmation of what you’ll pay will be shown on the assessment that you’ll receive in spring 2020.
These calculations assume that all of your CIS operatives receive deductions at 20%. If you have subcontractors paid at 30%, the actual amount you’ll pay for the levy is likely to be slightly lower.
Regardless of what you’ve paid your employees, subcontractors and limited companies engaged under contracts for services you will need to complete an annual Levy Return once your business is registered with CITB.
Who must send a Levy Return?
Under the Industrial Training Act 1982, all construction industry employers/contractors must be assessed against the CITB Levy and a Levy return sent each year.
When must you send your Levy Return?
You will receive a Levy Return form from CITB every spring, which must be completed and returned within 30 days of receipt.
|30 June||If you don’t submit your Levy Return by this date, then any grant claims could be withheld|
|30 November||If you don’t submit your Levy Return by this date, then you could face losing your chance to claim any grants|
Need help submitting your Levy Return?
If you need some support in submitting your Levy Return, you can download some guidance notes directly from CITB:
Can you deduct CITB levy from subcontractors?
Only CITB is allowed to collect the construction levy from employers in the industry under the 1982 Industrial Training Act. As a Main Contractor, you aren’t entitled to deduct any money from your workforce in relation to CITB Levy. To make any deductions from your employees/subcontractors, it must be agreed to beforehand.
Is CITB levy tax deductible?
Any levies imposed on employers/contractors are allowable tax deductions (See BIM47605). Many contractors who pay these levies to the CITB look to recover the cost from payments to their subcontractors.
Useful Government Guidance:
Not sure about the CITB Levy and whether you fall under it? Our team of in-house experts can help you understand your business and responsibilities so you can remove the risk of any unexpected costs. Please contact us using these contact details.