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THE TRAINING LEVY

 

Liability to the training levy

A leviable establishment is any establishment that is wholly or mainly engaged in the principal and related activities of the engineering construction industry during the relevant base period.

All full and part-time employees and labour-only contractors employed by such an establishment and working in Great Britain or its offshore waters are within scope of the legislation and are required to be declared to the ECITB and be assessed for training levy.  This includes all workers in the establishment, not just those actually engaged in principal or related activities.  Workers engaged in support and other activities must also be declared.

 

How the training levy is calculated

Following consultation with employers, the ECITB recommends the rates of training levy to the Secretary of State and to Parliament for approval. A Levy Order is then passed which sets out the rates of levy to be applied and provides the ECITB with the authority to raise a levy. 

All establishments on the ECITB’s Register of Leviable Establishments are required by law to complete an annual Statutory Manpower and Payroll Return. The information provided in the Return enables the ECITB to assess the amount of training levy payable (if any), and also provides information on employment levels in the industry. In particular, the Return includes a declaration of payments made to employees and contractors during the base period 6 April to 5 April. The training levy is calculated on the basis of the declaration.   

In each establishment, workers working mainly on site and all other workers are required to be declared separately.  Training levy will be assessed on the total gross emoluments paid to employees and the total gross payments made to labour-only contractors hired under labour-only agreements.  

 

Training levy rates and exemption levels

For employees and labour-only contractors wholly or mainly working on site in Great Britain or its offshore waters, a training levy of 1.5% is payable on the total gross emoluments paid to employees and the total gross payments made in respect of labour-only contractors during the base period.  If the total gross emoluments and total gross payments are less than £275,000 no training levy will be payable in respect of site-based workers.  

For all other employees and labour-only contractors wholly or mainly working in Great Britain, a training levy of 0.18% is payable on the total gross emoluments paid to employees and the total gross payments made in respect of labour-only contractors during the base period.  If the total gross emoluments and total gross payments are less than £1,000,000, no training levy will be payable in respect of all other workers.

 

Paying the training levy 

Where an employer returns the Statutory Manpower and Payroll Return and is liable to pay a training levy, a Demand for Payment detailing the training levy due will be sent the following January.  Provided an appeal against the assessed levy is not lodged, the training levy is required by law to be paid within one month of the date shown on the levy demand and in one instalment.

In cases where an employer does not return the Statutory Manpower and Payroll Return, the establishment’s training levy liability is estimated (which may be more than the correct amount) and an Estimated Demand for Payment is sent detailing the estimated training levy due.  Provided an appeal against the assessed levy is not lodged, the training levy is required by law to be paid within one month of the date shown on the levy demand and in one instalment.

ECITB grants and services may be withheld where payment of the levy is overdue.

 

Timetable of events 

In April, the ECITB sends Statutory Manpower and Payroll Returns and Guidance Notes to employers in respect of the base period 6 April to 5 April.  Employers must submit the completed Return by 30 June.   

The levy calculated in respect of the base period will be payable the following January when employers will receive a Demand for Payment.  Provided an appeal is not lodged, employers have one month to pay the levy which must, by law, be paid in full and in one instalment.  

The levy collected will be used to fund services and the payment of training grants during the following year.  

It should be noted that where an employer fails to submit the Statutory Manpower and Payroll Return by 30 June, the ECITB will estimate the emoluments and labour-only payments and calculate the training levy due based on the estimate.  The ECITB may also withhold grants and services whilst the Return remains outstanding.

 

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