7 April 2016
Understanding the CITB and Apprenticeship Levy
Over the next two years Build UK will be working closely with CITB to deliver the following:
1. Agree and implement a Transition Package that ensures construction employers are not bearing the cost of both the CITB Levy and the new Apprenticeship Levy
2. Agree and implement a new CITB Levy Order
3. Agree and implement a new Grants Scheme.
The Government’s new Apprenticeship levy takes effect from April 2017 and will be paid by all employers with a payroll of £3 million. This means that some construction employers will be paying both the CITB Levy and the Apprenticeship Levy.
Build UK has clearly stated that employers should not bear the full cost of the two levies, however, until the next consensus process which will take place in the autumn of 2017, employers in scope to both the CITB and the Apprenticeship Levy will be required to pay both.
To address this issue, CITB has proposed that from April 2017 to March 2018 there will be a transitional arrangement enabling employers to reclaim CITB grants for training up to the value of any Apprenticeship Levy paid, details of which are expected shortly.
In April 2018 any transitional arrangements will end and, if supported by industry, a new CITB Levy Order that takes account of the Apprenticeship Levy will be introduced.
Build UK is represented on the CITB Levy Working Group tasked with developing the new levy proposals. To help members understand what will be happening and when, we have prepared a colour coded timeline of CITB activity.
Whilst both the CITB Levy and the Apprenticeship Levy require employers to pay 0.5% of their PAYE bill, the various thresholds that apply mean that this does not simply sum-up to firms paying a total of 1% on PAYE.
Impact of CITB Levy and Apprenticeship Levy on Employers 2017-18
| Scheme Rules | |
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Apprenticeship Levy
Levy rate
Thresholds/allowances
Further information |
CITB Levy
Levy rate
Thresholds/allowances
N.B: Total wage bill includes PAYE plus payments to net (taxable) CIS subcontractors for a year. For simplicity, calculations below assume employers makes no Net CIS payments. |
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Employer with annual wage bill of £79,999 or less
CITB Levy or Apprenticeship Levy Payments?
Total payments (CITB Levy + Apprenticeship Levy) |
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Employer with annual wage bill between £80,000 – £399,999
CITB Levy or Apprenticeship Levy Payments? Example of employer with annual pay bill of £200,000 (No Net CIS payments) CITB Levy Payments 0.5% x £200,000 = £1,000 Employer eligible for 50% reduction on CITB levy bill. Total CITB Levy payments = £500 Apprenticeship Levy Payments 0.5% x £200,000 = £1,000 Apprenticeship Levy payment would be £1,000 – £15,000 allowance = £0 Total payments (CITB Levy + Apprenticeship Levy) |
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Employer with annual wage bill between £400,000 – £3,000,000
CITB Levy or Apprenticeship Levy Payments? Example of employer with annual pay bill of £1,500,000 (No Net CIS payments) CITB Levy Payments 0.5% x £1,500,000 = £7,500 Employer not eligible for reduction on CITB levy bill. Total CITB Levy payments = £7,500 Apprenticeship Levy Payments 0.5% x £1,500,000 = £7,500 Apprenticeship Levy would be £7,500 – £15,000 allowance = £0 Total payments (CITB Levy + Apprenticeship Levy)£7,500 |
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Employer with annual wage bill above £3,000,000
CITB Levy or Apprenticeship Levy Payments? Example of employer with annual pay bill of £5,000,000 (No Net CIS payments) CITB Levy Payments 0.5% x £5,000,000 = £25,000 Employer not eligible for reduction on CITB levy bill. Total CITB Levy payments = £25,000 Apprenticeship Levy Payments 0.5% x £5,000,000 = £25,000 Apprenticeship Levy would be £25,000 – £15,000 allowance = £10,000 Total payments (CITB Levy + Apprenticeship Levy)£35,000 |
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