20 Jan 2017

CITB review and rate cut

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AccountingThe CITB has been subject to a great deal of criticism over the last couple of years with many calls for it to be scrapped. We do not come across many (if in fact any) people in the building industry that get a benefit from the CITB that outweighs the burden.

The CITB must carry out a review every three years and get a majority consensus from the industry that it should continue to apply to levy within construction. The next review is to be carried out this year and there is a great deal of concern within the CITB as to whether they will be able to reach that majority consensus. It was a comfortable “yes” vote three years ago but with margins being squeezed, materials increasing, increased taxes and the apprenticeship levy, fewer and fewer businesses seem to be on board with the continuation of the CITB.

I believe they took a serious hit in the public perception when they “simplified the levy” and removed the labour only offset to which they believe very few people would actually see a difference. I am still not quite sure to this day how this wasn’t going to make a big difference to the amount of levy companies would pay and I have encountered a lot of construction businesses since that have seen their levy assessment increase to unprecedented levels within their business.

To try and win back some support the CITB have recently announced that they will reduce the levy by a third but this only relates to the levy for PAYE. The new rate will therefore be 0.35% of PAYE and the rate for subcontractors will remain at 1.25%. Whilst I am sure many will appreciate this, I believe the rate of 1.25% should have also been reduced to at least 1% but this would result in too greater loss for the CITB.

The CITB will also increase the number of firms included in the census to try and ensure it reaches more companies and gets a more accurate response.

I believe the CITB will get the go ahead to continue operating for another three years although I hope to be proved wrong as predicting what the masses will vote for seems to be quite difficult these days.