An improved CITB levy system will come into effect in spring 2017, in response to feedback we received from construction employers in the 2014-15 consensus process. See Background to the 2017 levy changes for information about the 2014-15 consensus.
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 and 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.
Use our levy calculator to work out how the changes may affect your 2017 levy assessment.
Features of the new 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.
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.
Benefits of the 2017 levy system
- Removing the LOPR mechanism means that more employers will contribute, but the total levy collected will remain the same, so most levy-paying employers will benefit.
- Easier to identify the figures you need for the Levy Return and less scope to make mistakes when completing it.
- Less bookkeeping 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’).
Help and advice
If you would like to speak to someone about how the changes will affect you, contact our levy team at email@example.com or phone 0344 994 4455.
You can also download our frequently asked questions about the 2017 levy changes (PDF, 225KB).
Levy Simplification Calculator