CITB levy deductions made by the Contractors

The CITB is an industrial training board responsible for promoting vocational training in the construction industry. It is empowered, by statute, to impose a levy on employers or contractors in the industry to fund its operations.

Many contractors seek to recoup this from their subcontractors in the form of a deduction made from the ‘Gross amount of payment’ shown on a contractors monthly return. Historically HMRC has accepted this practice and included it in our guidance.

HMRC has now reviewed the practice and concluded that it can no longer be supported as it is not a part of the current or past CIS legislation.
This change also has implications for VAT. Customers will need to be aware that the value of the subcontractor’s supply for VAT
purposes will not be reduced by CITB levy deductions in the future. This change will be effective from 6 April 2014.
Customers who use payroll software for CIS will need to ensure this is reflected in any new updates.

Further information about the CITB levy is available on the CITB website