Construction Industry Training Board (CITB) Levy deductions

06 March 2014

HMRC published a news item at the end of January advising customers about a proposed change in practice from 6 April 2014 regarding the CITB levy on employers or contractors. The construction industry expressed some concerns and as a result HMRC has reviewed and revised their advice.

Construction Industry Scheme (CIS)

We can confirm that the CIS applies only to payments made under construction contracts. Where contractually agreed deductions such as insurance charges, amounts equal to the ‘CITB levy’ or any other training costs are deducted before payment then CIS is only operated on the amount paid after any deduction for materials and VAT

VAT

We can confirm that where the parties have contractually agreed to an amount equating to the ‘CITB levy’ being passed on to the subcontractor, the subcontractor’s supply for VAT purposes is reduced by the equivalent amount of the ‘CITB levy’ deduction.

Further information about the CITB levy is available on HMRC’s website.