The new levy calculation process, designed to make life easier for companies, was approved by the CITB board yesterday.
Following an 18-month consultation with industry and research with employers, the new process has been designed by a levy working party (LWP) – a group of industry representatives tasked with looking at how to simplify the levy process.
The new scheme:
- maintains PAYE levy at 0.5%
- brings to an end the raising of levy on payments to labour-only subcontractors
- introduces a levy on payments made to net (taxed) CIS subcontractors, using figures already provided by employers to HMRC
- increases the size of the small business levy reduction from £100,000 to £300,000
- removes the labour-only payments received offset mechanism, which CITB says affects fewer than 10% of all employers.
The CITB says that all registered employers will receive a letter from next week, explaining the changes and the possible impact on their business.
CITB head of levy and grant Douglas Matthew 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 full details on the levy changes, see the CITB website.