The ECITB Industrial Training Levy
The ECITB works to ensure the engineering construction workforce has the specialist skills required by industry. Employers which are mainly engaged in engineering construction work fall within the scope of the ECITB. If such “in-scope” employers are over a certain size, they are required by law to pay an industrial training levy to the ECITB levy. However, all in-scope employers, regardless of size, are eligible to receive grants for training undertaken by their workers.
This will depend on the information declared by in-scope employers.
In-scope engineering construction employers working in Great Britain or its offshore waters are required by law to make an annual declaration containing information about their workforce (full-time and part-time employees, as well as any labour-only contractors). The annual declaration will include details of the employer’s total labour payments during the base period (6thApril to 5thApril).
The employer’s total annual labour payments forms the basis of the calculation of any training levy which is payable.
Employers must declare the total number of full and part-time employees working in Great Britain during the year ending 5 April, and the total annual labour payments made. Total annual labour payments include all salaries, fees, wages, bonus and incentive payments, payments to trainees, taxable redundancy payments, statutory sick and maternity payments that appear on P60s, allowances (such as travel and accommodation allowances which are paid as part of salaries or wages) and any gratuities or other profits or incidental benefits of any kind obtained by an employee other than pension contributions. The information needed can normally be found in your PAYE tax deduction cards (P11 deduction working sheets or P14 end of year summary sheets).
Employers must also declare all full and part-time persons working under labour-only agreements or arrangements and the payments made in respect of the year ending 5 April, provided that such individuals were mainly working in Great Britain.
Labour-only contractors are individuals working for contractors where labour is more than 50% of the cost of the agreement. Labour-only contractors can include contracted, sub-contracted or self-employed workers if they are under the control or direction of your employer, either directly or indirectly. Project work where the contractor organises its own management and resources and ensures that then project requirements are met may not be labour-only. This depends if your employer has control and direction over the workers.
For labour-only payments, all other costs, such as materials and equipment, should be removed. VAT added to payments under labour-only agreements should not be included in your declaration. The information required to complete the declaration can normally be found in an employer’s purchase ledger records. A fuller explanation relating to labour-only contractors and arrangements may be found in the ECITB’s Levy Guidance Notes (see below).
To ensure that levy is not paid twice for the same workers, if an employer hires out its workers to for other engineering construction employers in Great Britain, the payments received (labour-only receipts) will be taken into account when calculating the amount of levy due. Employers wishing to declare any labour-only receipts should contact the ECITB’s levy team for a labour-only receipts declaration form.
The industrial training levy is calculated by applying the appropriate levy rate to the employer’s total annual labour payments.
For employees and labour-only contractors who mainly work on sites in Great Britain or its offshore waters, the training levy is 1.2% of the total payments to employees and labour-only contractors during the base period 6 April to 5 April.
If the total payments, including salaries and other allowances, are less than £275,000 then no training levy is payable in respect of site-based workers. However, if the total paid is less than £1,000,000 then no training levy is payable in respect of all other workers.
For all other employees and labour-only contractors mainly working in Great Britain, a training levy of 0.33% of the total payments to employees and labour-only contractors will be payable from 2023. This is an increase on the previous level of 0.14% and was agreed by the overwhelming majority of levy-paying employers in Autumn 2019. The ECITB’s proposal will see the offsite levy rising to 0.2% in 2021, 0.27% in 2022 and 0.33% payable in 2023.
The ECITB training levy must be paid within one month of the demand for payment and in one instalment. Employers may not receive ECITB grants and services when levy payment is overdue.
In-scope employers make their annual Statutory Levy Declarations using the ECITB’s on-line portal service. Employers will be notified by email when their on-line declaration forms are available for completion, together with details of the date by which completed declarations must be submitted.
The levy calculated in the manner described above is payable in January of the following year when employers receive a demand for payment.
Employers with a pay bill of over £3m per fiscal year relating to employed labour have been required to pay the Apprenticeship Levy since April 2017. This is payment is made to HMRC through the PAYE process, and is in addition any industrial training levy charged by the ECITB.
The Apprenticeship Levy is “ring-fenced” to support apprenticeships in England across all sectors and occupations.
The ECITB training levy is specific to the engineering construction industry, and the ECITB determines how the money is invested in training and other projects for the benefit of the sector.
For more information about the Apprenticeship Levy visit www.gov.uk/guidance/pay-apprenticeship-levy
- the application of the regulations underpinning the levy;
- the completion of the annual Statutory Levy declaration;
- the use of the ECITB’s on-line portal service; and
- levy appeals.
You may also contact the ECITB’s Levy team by email at: Levy_Scope@ecitb.org.uk
For key legal documents about the ECITB’s industrial training levy including a list of all leviable establishments follow the link below.