Deducting levy from wages (both PAYE and Net CIS)

Under the 1982 Industrial Training Act, CITB is the only organisation authorised to collect the construction levy from employers in the industry.

Main contractors are not allowed to deduct money from workers’ wages (both PAYE and Net CIS) on CITB’s behalf, unless the worker has agreed to it beforehand. This is explained in the 1996 Employment Rights Act, which says that:

  • the deduction must be authorised under the workers contract, or
  • the worker must previously agree to it in writing.

You should always seek independent legal advice regarding your own unique circumstances.

Passing on the levy

Passing on the levy is a term used to describe employers deducting money from subcontractors’ or other workers’ wages (both PAYE and Net CIS) without their agreement, in order to raise funds to pay their own levy.

In December 2011, CITB and our consensus federations issued the following joint statement about passing on the levy:

Passing on the levy: joint statement

Deducting levy from subcontractors’ or other workers’ wages

CITB is the body appointed by parliament to raise and collect a levy from all construction employers with an aim to use that levy to provide training to the industry. No other organisation has this statutory power to raise a levy from construction employers and no other employer is authorised by CITB to collect it on its behalf.

The levy is assessed in accordance with a formula set out in the industrial training legislation at 0.5% of payments to employees plus 1.5% of payments to labour-only subcontractors in respect of the provision of services less 1.5% of all payments received from employers in the construction industry for work carried out as a labour-only subcontractor.*

Despite CITB being the only body authorised to collect the levy some employers within the industry make deductions from their labour-only subcontractors as a way of raising funds to pay their own levy assessments, calling it ‘a deduction for CITB levy’, or ‘amounts in respect of CITB levy’ or some such similar claim. These deductions can often be at higher rates than are set in the Industrial Training legislation and collected by CITB.

The levy is not like PAYE, which an employer has legal authority to deduct from their worker and then pay over to HM Revenue & Customs. Liability for paying levy falls on, and remains with, the establishment assessed to levy by CITB.

These deductions, made by other employers, are not payments of levy. It is simply a way of the relevant party reducing the amount due on a subcontract payment. The Industrial Training legislation does not give employers the power to pass on their own levy liability to their subcontractors.

Most contractors understand and accept their responsibility to pay any levy and do not attempt to get subcontractors to accept misleading deductions from the sums properly due for their work.

This statement has been agreed by the Consensus Federations involved in reviewing the levy and is for information purposes only. Any subcontractor who has had payments of this sort deducted may wish to seek independent legal advice.

* The figures quoted reflect the levy calculations at the time of the statement.

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