Proposed changes to the CITB levy system are expected to cut the administrative burden for the 22,000 levy payers but also inflate the amount paid by 16% of contractors.
The new system, approved by the CITB’s board yesterday after 18 months in development, retains the current rules on PAYE staff but aligns the calculation of levy payments for subcontractors to employers’ returns to HMRC under the Construction Industry Scheme.
The changes also remove a “labour-only payment offset mechanism” which reduced the levy bill for around 10% of the 22,000 of levy-payers, resulting in a simpler system but also an increase in future costs.
The CITB has analysed the 2014 levy returns according to the new criteria, and concluded that 56% of firms would pay the same, while 28% would see a cut in their bill. Overall, the new regime has been designed to raise the same amount of levy from the industry as the current system.
Paul Bogle, head of policy at the National Federation of Builders, said the proposals removed the confusion that arose from CITB and HMRC having different definitions of “labour-only subcontractors”.
“There were often disputes arising from this, but the recent legislation on agency workers has also helped make it clearer who is genuinely self-employed and reduced their number – if it’s now clearer they’re employed, they’ll be subject to the levy.”
“It will simplify life for members, and we welcome the reduction in admin costs, at a time when the cost of being in business is rising in a lot of other areas.”
“We’ll be working with CITB to identify which of our members might pay more,” Bogle concluded.
"It will simplify life for members, and we welcome the reduction in admin costs, at a time when the cost of being in business is rising in a lot of other areas. We’ll be working with CITB to identify which of our members might pay more."
Paul Bogle, National Federation of Builders
According to the CITB, the employers likely to experience the most impact from the changes – both positive and negative – are generally “large employers”, due to the “level of net paid subcontractors they use in comparison to labour-only subcontractors and the diversity of their business models”.
The CITB’s Levy Working Party (LWP) met with 14 industry trade federations during the consultation process: the National Federation of Builders, Federation of Master Builders, Home Builders Federation, Civil Engineering Contractors Association, British Woodworking Federation, National Association of Shopfitters, Scottish Plants Owners Association, Scottish Building Federation, Scottish Decorators Federation, National Federation of Demolition Contractors, UK Contractors Group, Hire Association Europe, National Specialist Contractors Council, and the Construction Plant-hire Association.
Every employer on the levy register also received a survey to express their views on the process.
All registered employers will receive a letter from next week, informing them of the changes to the levy and the possible impact on their business.
Douglas Matthew, head of levy and grant for CITB said: “The changes have come in response to feedback from employers. They told us that the current process is complicated, time-consuming and can lead to extra administration costs.
“More than 22,000 employers currently pay the levy so it is important that we have the right system in place. Using figures provided by employers on their 2014 Levy Returns, we believe that under the new arrangements 84% of employers are likely to pay the same or less levy. Where companies face an increase in their payments, we will work closely with them to help them through the transition.
“To give all employers time to prepare for the new arrangements, the changes will not be implemented until 2017.”
For more detail on the proposals click here
