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CITB has confirmed a range of levy changes for firms including labour-only subcontractors and Construction Industry Scheme subcontractors which could see some interior fit-out and finishing contractors saving six per cent on existing payments.

The new scheme, which will come into effect in 2017, intends to simplify collection and will see PAYE levy maintained at 0.5 per cent; bring to an end the raising of levy on payments to labour-only subcontractors (LOSC); and introduce a levy on payments made to net CIS subcontractors of 1.25 per cent.

Douglas Matthew, head of levy and grant for CITB, said: “Using figures provided by employers on their 2014 levy returns, we believe that under the new arrangements 84 per cent of employers are likely to pay the same or less levy.”

David Frise, chief executive at AIS FPDC, said: “We welcome the reform, which is well overdue and much needed. It is part of the process of  levelling the playing field for members and should be simple, transparent and fair. Overall the reform appears to address the issue of LOSC, the dominant business model in the sector. “However, the implementation in 2017 is too late and should be undertaken sooner. There must be a robust system to ensure that all companies which should be in scope pay the levy.”

Andrew Measom, managing director at Measom Dryline, said: “The levy is in itself a good idea and basing it on tax returns is also a good way of making sure all comply.

“This should bring in a huge amount of additional revenue and should reduce the levy percentage. CITB should make a commitment to make this cash neutral.”

But will contractors be better off under the new scheme?

Tax consultant Liz Bridge said: “As a group AIS FPDC members are better off by about six per cent. For most individual members (contractors in the fit-out and finishing sector) the change is likely to be negligible.

“Those with an employed workforce are likely to see very little change unless they have a wage bill between £100k and £300k, in which case they are likely to benefit from the extended 50 per cent reduction band. Those most likely to be affected adversely are those using predominantly net paid supply and fix subcontractors – but this is unlikely to be a large group.”