2017 levy: what's changed?

In spring 2017, an improved CITB levy system will come into effect. We developed this levy system in response to feedback from construction employers in the 2014 to 2015 consensus process. 

We are consulting with industry again to review the levy rate for 2018. Find out how you can have your say on the 2018 levy.


How the 2017 changes affect your levy payments

Most employers won’t see a big difference to their levy payments in 2017. Our research shows that:

  • 56% of employers will continue to pay the same amount
  • 28% will pay less
  • 16% may pay more.

The reason some employers may pay more is that the 2016 Levy Return doesn't take account of labour-only payments received (LOPR). So if your levy was previously reduced by LOPR, you’re likely to see an increase in the levy you pay.

Features of the 2017 levy system

The main features of the new levy system are:

  • The rate on payments to Pay As You Earn (PAYE) staff will remain at 0.5%.
  • The levy will no longer be raised on payments to labour-only subcontractors (LOSC).
  • A rate of 1.25% will be introduced on payments to Construction Industry Scheme (CIS) subcontractors who you deduct CIS tax from.
  • Employers with a wage bill under £80,000 will continue to be exempt from the levy.
  • The 50% levy reduction will be extended to more employers by raising the wage bill threshold to £400,000.
  • The LOPR mechanism will be removed.

Benefits of the 2017 levy system

We’ve set the levy rate at a level that is both affordable for employers and ensures we have enough income to continue to pay grants to support training. We aim to keep the levy income at the current forecast levels.

Here are some of the main ways the new system will help you:

  • While the total amount of levy collected remains the same, more employers will contribute a levy as the LOPR mechanism has been removed. This is a fairer system that benefits the majority of levy-paying employers.
  • Easier to identify the figures you need for the Levy Return.
  • Less record keeping is required as you use the monthly forms you send to HMRC to complete your Levy Return. 
  • Removes the ambiguity around whether subcontractors worked as labour-only (LOSC) or as labour and materials (supply and fix). With the new system, subcontractors are categorised by whether you paid them after deducting the CIS tax (or ‘paid net’) or before you deducted the tax (or ‘paid gross’).

Background to the 2017 levy changes

This is how we developed the 2017 levy system using feedback from employers in the construction industry through the consensus process.

1. Your feedback

Prior to 2012, we started to gather employers’ views on the CITB levy. You told us:

  • The basis for calculating the levy needed to be simpler
  • The Levy Return needed to be easier to complete with less bookkeeping.
  • Instead of raising a levy on payments to labour-only subcontractors (LOSC), we should consider a system based on Pay as You Earn (PAYE) and align this with the government’s Construction Industry Scheme (CIS) and the monthly CIS300 forms that employers send to HMRC.

2. Developing the new levy system

After we gathered your feedback, the Levy Working Party (a small group of industry representatives) developed ways to simplify the levy system over the next 18 months.

The working party followed objectives set by the industry when developing the new levy system. The objectives were:

  • The new system should be simpler
  • CITB should maintain current forecast levy income levels, not increase them
  • most employers should end up paying about the same amount of levy as they pay under the current system
  • The existing levy rate on payments to PAYE (0.5%) should be maintained
  • The final proposal must be endorsed by the construction industry
  • The final proposal must be legally sound.

3. Consultation with industry

We then consulted extensively with the industry to make sure the new system would comply with the objectives above. We gathered feedback through:

  • events held with construction employers across Great Britain
  • independent research conducted into employers’ views
  • a survey we sent to all employers with the 2014 Levy Return to gather feedback on the proposed levy changes
  • analysis of data from the 2014 levy returns and CIS data from 36,500 employers to assess the potential impact of the changes. 

4. Approving the new levy system

In July 2014, the CITB board approved the Levy Working Party’s proposal for the revised levy system.

The proposal was then approved by construction federations and employers through a formal consensus process.

CITB submitted the approved proposal to the Government and it was included in the  2015 Levy Order, which came into force in March 2015.

The Levy Order gives CITB the authority to raise a levy and sets out how that levy will be calculated.

The levy rate will be reviewed again before the 2018 Levy Order.

How we communicated with you about the changes

Throughout the process, we worked closely with employers and federations to ensure they were kept up-to-date with developments and when the changes would be implemented.

Timeline of communications:

  • July 2014: we wrote to all CITB-registered employers to inform them of the changes to the CITB levy and the potential impact on their business. 
  • December 2014: we sent another mailing to all CITB-registered employers.
  • March to April 2015: in the Levy Assessment Notice we sent in spring, we explained how much levy you would have paid if the new levy system had been used.

Help and advice

If you would like to speak to someone about how the changes will affect you, contact our levy team at levy.grant@citb.co.uk or phone 0344 994 4455.

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