Although companies within scope don’t have to pay any more money until 2017, changes to the way the CITB levy is calculated, which started in April 2015, may mean specialist contractors are running up a much bigger, or smaller, bill for payment in 2017.
FIS training manager Jeremy Clayton said: “You must check the figures and work out what the changes mean for your firm and price appropriately from April 2015. If the changes mean a bigger bill is heading your way, make sure that you price the change in.”
So what is happening? For the levy payable in 2017, the base year is April 2015/2016. In calculating that levy, the CITB will ask for the figures of tax deducted from CIS net paid subcontractors. They will multiply that figure by five to get back to the gross payment excluding materials and the levy is likely to be 1.25 per cent.
CITB say that the bill for the levy is expected to go up for 16 per cent of companies in construction and to stay the same or go down for 84 per cent.
Jeremy Clayton continued: “The sensible approach is to go to the CITB website (www.citb.co.uk/levysimplification) and use the online calculator. That should tell you whether you are one of the losers and need to price up.
“The other action to take is to talk to all your net paid CIS subcontractors and see which, if any of them, can apply for gross status. If they can get gross status it will save you 1.25 per cent of their wage bill. Many net subcontractors say that they stay net because they like using the CIS scheme as a way to pay tax by instalments like a ‘Christmas club’. So, see if they can forgo the ‘Christmas club’ approach to taxes and get a gross status.”