Deducting levy from wages (both PAYE and Net CIS)
Although the 1996 Employment Rights Act permits deductions from earnings in certain circumstances, under the 1982 Industrial Training Act, CITB is the only organisation authorised to impose and collect CITB levy from employers in the industry.
Main contractors are not authorised to deduct money from workers’ wages (both PAYE and Net CIS) on CITB’s behalf.
"Passing on the Levy" is a term used to describe when employers deduct money from subcontractors’ or other workers’ wages (both PAYE and Net CIS) without their agreement, in order to raise funds to pay their own levy.
Has Levy been passed on to you?
This survey provides an opportunity for affected subcontractors and others to anonymously report this practice to CITB, and should they wish, for CITB to 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. It will be deleted once this research has concluded.
Passing on the Levy: Joint statement, September 2024
Deducting CITB Levy from subcontractors’ 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 Nations Councils involved in reviewing the Levy and is for information purposes only.
List of Signatories
- CITB Executive Team
- LSC – Levy Strategy Committee
- Nation Council England
- Nation Council Scotland
- Nation Council Wales
- Build UK
- British Woodworking Federation (BWF)
- Civil Engineering Contractors Association (CECA)
- Construction Plant-hire Association (CPA)
- Federation of Master Builders (FMB)
- Finishes and Interiors Sector (FIS)
- Hire Association Europe (HAE)
- Home Builders Federation (HBF)
- National Association of Shopfitters and Interior Contractors (NAS)
- National Federation of Builders (NFB)
- National Federation of Demolition Contractors (NFDC)
- Scottish Building Federation (SBF)
- Scottish Decorators Federation (SDF)
- Scottish Plant Owners Association (SPOA)
What is Passing on the Levy?
Passing on the Levy is a historical practice where CITB registered employers make deductions from payments made to their subcontractors calling it ‘a deduction for CITB Levy’, or ‘amounts in respect of CITB Levy’ or similar. On occasions, deductions are made without the subcontractors knowledge or consent.
Why does this happen?
Some employers see ‘passing on’ the Levy as a way of raising funds to pay their own Levy liability. Often, these deductions are made at an amount equivalent to the CITB Net CIS Levy rate (currently 1.25%) or higher.
Are they legally allowed to do this?
There is nothing in CITB Levy related legislation which states employers can or cannot do this. However, if there is agreement between two parties for deductions to be made, the practice is lawful and CITB has no power to intervene.
CITB firmly opposes this practice as it undermines CITB’s legal requirement to support small employers, particularly those that under the CITB Levy Order may not be due to pay the CITB Levy at all. Where passing on is identified, CITB will engage with employers and inform them that only CITB has the statutory power to collect Levy. A sanctions process is however currently under consideration with a view to implement if it is felt necessary to eradicate this practice.
How big of an issue is this?
We are aware that passing on the Levy continues to exist in the construction industry, but goes largely unreported due to several reasons:
- Such deductions are made within a contract, so agreement has been obtained from the subcontractor (no breech of Employment Law); and
- The subcontractor does not want to detrimentally impact its working relationship with the main contractor by complaining about deductions being made. A main contractor may seek an alternative subcontract workforce where complaints are made.
What can I do if CITB Levy is being deducted from me without consent?
Point out the Statement on CITB’s website to the employer, but if this does not deter them from making the deductions you can then report directly to (to be confirmed by Comms) giving details of who is carrying out this practice. CITB will then write to the employer to remind them they do not have the statutory power to collect CITB Levy. Your information will always be kept anonymous.
What is the ‘Passing on Statement’ and how can it help?
This is a position statement on the practice of passing on the Levy of CITB, supported by the Levy Strategy Committee, Nations Councils and Prescribed Organisations. It aims to send a strong and clear message to employers that the Levy is their responsibility and not that of their subcontract workforce.
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