CITB Calls for End to Passing on the Levy

Deducting CITB Levy from Sub-Contractors or other Workers

The Construction Industry Training Board (“CITB”) is aware that the practice of ‘passing on the CITB Levy’ is a topical issue within the construction industry. Accordingly, at the request of the Levy Strategy Committee, CITB, Prescribed Organisations and Nations Councils have jointly developed the following statement regarding this.

CITB is (and has been since 1964) the body appointed by Parliament to raise and collect the industrial training Levy from construction employers across England, Scotland and Wales. This statutory levy (“CITB Levy”) is then used in line with CITB’s statutory purpose to, amongst other things, provide training and support to the construction industry. No other organisation has a statutory right under the Industrial Training Act 1982 (“1982 Act”) to raise and collect the CITB Levy. Responsibility for the CITB Levy rest solely with CITB. However, it should be noted that in February 2019 CITB outsourced a number of its operational functions to Shared Services Connected Limited (“SSCL”), and since then, SSCL is authorised by CITB to collect the CITB Levy on its behalf.

The CITB Levy is assessed in accordance with a formula set out in legislation (known as a Levy Order). Currently the CITB Levy is raised at 0.35% of payments to direct employees plus 1.25% of payments to Net paid CIS sub-contractors.

Despite CITB being the only organisation authorised under the 1982 Act to raise and collect the industrial training Levy (CITB Levy) from construction employers, CITB is aware that some employers within the construction industry are making deductions from their sub-contractors or other workers as a way of raising funds to pay their own CITB Levy assessments, calling it ‘a deduction for CITB Levy’, or ‘amounts in respect of CITB Levy’ or similar. These deductions can often be at higher rates than are set in a Levy Order and collected by CITB direct. Construction employers have no statutory power or authority to do this under the 1982 Act.

Moreover, the CITB Levy is not like PAYE or CIS which an employer has legal authority to deduct from their workers and then pay over to HMRC. In contrast, liability for paying the CITB Levy falls on, and remains with, the construction establishment assessed to Levy by CITB.

These deductions, made by some construction employers, are not payments of CITB Levy but are a way of raising funds to pay or reduce their own CITB Levy assessments/liability. CITB firmly opposes this unfair and unauthorised activity under the 1982 Act.  This activity not only undermines CITB’s legal requirement to support small employers, it also has a negative impact on the individual sub-contractors that make up a large proportion of the workforce, particularly those that under the Levy Order may not be due to pay the CITB Levy. In these instances where ‘passing on’ occurs, a Levy (not the CITB Levy) is being ‘imposed’ on small employers by others.

CITB appreciates that the majority of construction employers display good values by accepting their responsibility to pay any CITB Levy and do not attempt to deduct or misguide contractors to accept deductions from the sums properly due for their work.

CITB has no power to intervene where two or more parties contractually agree between themselves to such deductions, although the absence of such an agreement may be deemed unlawful including under the Employment Rights Act 1996. Any contractor who has had payments of this sort deducted without agreement may wish to seek independent legal advice.

This statement has been agreed by the Levy Strategy Committee, Prescribed Organisations and Nation Councils involved in reviewing the Levy and is for information purposes only.