Although the construction industry is showing a good return to growth since the COVID-19 lockdown, some 85% of respondents of a survey of companies from March to May 2020 have voted to increase the CITB Levy threshold from £80,000 to £100,000, but how could this help the construction industry?
The CITB Levy is an annual payment made by employers and contractors in the construction industry to support reinvestment into the construction industry. It gives companies access to grants that can be used to support apprenticeships and develop the skills of their workforce.
Any construction company that is registered with CITB and pays more than £80k to employees and subcontractors is liable to pay the Levy. The amount each business will pay depends on the total amount they pay employees and the deductions you make for subcontractors on the Construction Industry Scheme (CIS).
Currently the rates are:
- 0.35% on total payments to all employees on your payroll
- 1.25% on CIS subcontractors
Although the body has announced a payment holiday on the Levy until September 2020 and then up to a full year to pay the 2020/21 fee due to the impact of Coronavirus. It has also proposed reducing the 2021/22 Levy rate by half, saving companies 25% over two years.
If the CITB Levy threshold was increased to £100,000 it would mean that less CITB registered companies would be liable to pay the Levy. This would help ease the financial burden many construction companies are currently facing and could go towards helping with staff retention.
An increase in the Levy threshold would mean that companies who pay less than £100,000 per year to employees and subcontractors could re-focus the money that would have been spent on paying the Levy to support employee training and keep more people employed for longer as we enter a period of economic uncertainty.
The financial relief would also mean that the industry is as prepared as it can be for the economic recovery once the crisis lifts.
There have even been calls for the Levy to be scrapped altogether as it’s believed that the grants are disproportionately lower compared with the amount of Levy paid across the companies that are liable to pay it and that it is a failing system that puts SMEs at a disadvantage and instead favours bigger contractors.