Practical Law

It has been a week or two of change in the construction industry. Matthew Hancock was appointed as the new construction minister and the Construction Industry Training Board announced that they are simplifying the way that the CITB Levy is calculated. This follows 18 months of industry consultation.

CITB Levy

The CITB Levy is a system which supports the important task of continuous training, learning and development in the construction industry. Just one of the things which the Levy does is to finance grants given to employers who train their employees.

It is hard to argue with the need to invest in training and up-skilling construction workers at any time, but even more so now. Construction activity looks fairly healthy and people are starting to speak with real meaning about skills shortages again. Fuller order books are great for the whole industry, but they bring with them the very real challenges of finding properly skilled and experienced workers. Bricklayers are often thought of as a barometer of the economy and all I can say is that I wish I’d finished my extension last year!

Simplifying

The process here is about simplifying the way the Levy is calculated, not drastic change. The CITB say that 84% of employers are likely to pay the same or less. Even my maths is good enough to know that means 16% will pay more. There is a good explanatory piece on the CITB’s own website which I won’t set out in full, and even an Excel spreadsheet which shows the impact of the changes. If you are worried whether you may be in the 16%, try the spreadsheet: it is really pretty good.

The main simplification feature of the new calculation will be to base it fully on payments made either through PAYE or CIS. That should cut down the accounting work required.

Some details

In a bit more detail:

• The Levy on the PAYE part of payments made will stay at 0.5%
• The previous regime, of offsetting labour only payments received against labour only payments made, is replaced. Now the Levy will be applied to labour only payments made to Net (taxed) CIS sub-contractors. The simplification part of the change is that this uses figures already provided by employers to HMRC. This rate will be 1.25% on Net (taxable) CIS payments
• The Small Business Levy Exemption of £80,000 is retained. This is based on total payments to PAYE and Net CIS.
• The Small Business Levy Reduction is increased from £100,000 to £300,000. The level of the reduction is 50%.

If that doesn’t look simple, remember that I said simplified, not simple. It is worth repeating though that the new calculation is now based fully on payments made either through PAYE or CIS.

2017 targeted

There is still some way to go. The new rules need parliamentary approval and would not be implemented until 2017. All currently registered employers should receive a letter from the CITB explaining the changes.