Businesses operating in the construction sector, which are liable to the Construction Industry Training Board (CITB) construction levy, should have September 2021 firmly in their diaries, because this is when the levy payment is due.
The levy was suspended in March 2020, initially for three months, to give relief to the sector during Covid. The levy was suspended further until September 2020, and then businesses affected were given up to a full year to pay the remainder owing for 2020/21, which takes us to September 2021.
Under the CITB’s Skills Stability Plan, to help employers recover, the levy for 2021/22 has been cut by 50%. This means employers will pay 18 months’ levy out of 24, making an overall saving of 25% across two years.
The levy applies to employers engaged wholly or mainly in construction industry activities. In other words, when construction activities take up more than half of the total employees’ time (including subcontractors).
The CITB levy is used to support construction employers to make sure the industry has the skilled workforce it needs, and is centred around three strategic priorities: careers, standards and qualifications, and training and development.
The amount levied is based on the total wage bill for employees. Employees include those on the payroll and Construction Industry Scheme (CIS) subcontractors who CIS deduction is made from.
Normal levy rates are 0.35% for PAYE and 1.25% for net CIS contractors – it is not applicable to contractors who are paid gross. However, in 2021/21 these rates have been cut by 50% for one year.
If your total wage bill (payroll and net CIS) is between £120,000 and £399,999 your organisation will receive a 50% reduction on your levy. This is called the ‘Small Business Levy Reduction’.
If your total wage bill (payroll and net CIS) is under £120,000, your organisation won’t have to pay the levy. This is called the ‘Small Business Levy Exemption’.
Even if you are not liable to pay the levy, a levy return has to be completed. It is important to pay the levy. If CITB catches up with non-payers, then multiple years’ worth could be due all at once.
At Optimum, our accountancy team based in Swindon and Cheltenham work closely with a number of clients in the construction sector, along with subcontractors. For help and advice on tax matters or the CITB levy, please get in touch.