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Blog 16 September 2024

Passing on the Levy

At CITB, we’re committed to supporting the construction industry and ensuring fair practices across the sector. The Board has recently issued an updated statement regarding the practice of ‘passing on the Levy’. This refers to when some construction companies or principal contractors pass the cost of the CITB Levy down to their subcontractors. Here’s what you need to know.

Understanding the Levy

The CITB Levy is a mandatory payment made by registered construction employers to help fund training and skills development across construction. As the body appointed by Parliament, only CITB has the authority to collect the Levy across England, Scotland and Wales.
The Levy is currently set at 0.35% for payments to direct employees and 1.25% for payments to Net CIS subcontractors. Firms with a wage bill of less than £120,000 are exempt from the Levy, those with a wage bill between £120,000 - £399,000 receive a 50% reduction.

What’s changing?

Some companies are trying to pass the cost of the Levy onto their subcontractors or workers. This means that instead of the company paying the Levy themselves, they deduct the amount from what they owe subcontractors. This is often called ‘a deduction for CITB Levy’ or ‘amounts in respect of CITB Levy’ or similar.

CITB strongly opposes this practice. It is not allowed under the 1982 Industrial Training Act and is often imposed by larger firms onto individual subcontractors.

Alongside industry partners, including our Levy Strategy Committee (LSC), Nation Councils and Prescribed Organisations, CITB has updated our Passing on the Levy statement. We are committed to ensuring a level playing field, with a fair and equitable Levy system where all employers contribute appropriately to skills and training development without shifting undue financial pressures.

The full statement can be found here. Key points include:

  • Employers have no legal authority to pass on the CITB Levy to subcontractors, unlike PAYE or CIS, where such deductions are permitted
  • These unauthorised deductions put additional financial strain on subcontractors, especially smaller businesses
  • The responsibility for paying the Levy rests solely on the company assessed by CITB
  • Subcontractors experiencing unauthorised deductions are encouraged to report them anonymously.

What should employers do?

It’s simple: if your company is registered and assessed to pay the CITB Levy, you are responsible for it. You should not deduct or pass on costs to your subcontractors. CITB appreciates the vast majority of employers act responsibly and pay their Levy without trying to pass it on to others.

If you’re a subcontractor and you’ve had Levy deductions taken from your payment without agreement, we strongly encourage you to report it using this form. Should you wish, CITB can make contact with the contractors declared to request they stop making these deductions. All information will be anonymously collected and not shared with any third parties.

Building a fairer industry

CITB aims to tackle the issue of passing on the Levy by raising awareness and encouraging firms to self-regulate. Passing on the Levy not only undermines the purpose of the Levy itself, but makes it tougher for smaller companies who are operating on reduced margins.

By working together, we can create a fairer system that supports skills development across the entire construction sector. If you have any questions about the Levy, please don’t hesitate to get in touch.