A statutory training levy that many growing contractors miss
The Construction Industry Training Board (CITB) levy is one of the least-discussed statutory obligations in construction accounting, yet it catches out a significant number of growing subcontractors and contractors every year. When a business's construction wage bill crosses the exemption threshold, CITB registration becomes a legal requirement, an annual levy return must be filed, and a percentage charge applies to both payrolled staff costs and payments to labour-only CIS subcontractors. Missing it means back-assessments, estimated charges, and the loss of grants that could have partly offset the levy cost.
The CITB levy and the Construction Industry Scheme are separate regimes. Registering for CIS does not register you for CITB. They are administered by different bodies and calculated on different bases. This guide covers both, starting with who must register and why.
What CITB is and what the levy funds
The Construction Industry Training Board is a statutory body established under the Industrial Training Act 1982. Its purpose is to ensure the construction industry has the skilled workforce it needs, by funding training, qualifications and apprenticeships. The CITB operates in England, Scotland and Wales (the CITB does not cover Northern Ireland, which has a separate body).
The levy is the mechanism by which CITB raises funds from construction employers. Those employers can then claim grants back from CITB for eligible training, effectively reducing (and in some cases eliminating) their net levy cost.
Who must register with CITB
Businesses engaged wholly or mainly in construction industry activities in Great Britain must register with CITB. "Wholly or mainly" means construction activities must make up more than half of the business's total operations (measured by employee time, broadly).
Construction activities covered by CITB include: building, civil engineering, demolition, groundwork, roofing, plastering, bricklaying, electrical installation, plumbing and heating, painting and decorating, scaffolding, and most other on-site construction trades. The CITB definition of construction is broad and aligns closely with the scope of CIS-specified construction operations.
Activities that are generally outside the CITB levy scope include: architecture, surveying, engineering design, manufacturing of components off-site, and certain specialist electrical and plumbing businesses where the regulatory framework (Gas Safe, NICEIC) takes them outside the standard CITB definition. If your business is borderline, contact CITB to confirm your status.
An important point for sole traders: a sole trader with no employees or labour-only CIS subcontractors typically has no payroll base and is therefore outside the levy. However, a sole trader who regularly pays labour-only CIS subcontractors is treated as an employer for CITB purposes and may be within scope if the total assessed payments cross the exemption threshold.
Current CITB levy rates (2025 and 2026 Levy Orders)
The following rates have been verified against CITB.co.uk in June 2026 and apply to the 2025 Levy (assessed spring 2026) and 2026 Levy (assessed spring 2027) under the applicable Levy Orders. CITB levy rates are set annually by Levy Order and can change; check CITB.co.uk before each annual return season to confirm the current figures.
| Worker category | Levy rate | Applies to |
|---|---|---|
| PAYE/payrolled employees | 0.35% | Gross wages paid through payroll |
| Net-paid CIS subcontractors (labour-only) | 1.25% | Payments to subcontractors from whom CIS deductions are taken at source (registered at 20% or unregistered at 30%) |
| Gross-paid CIS subcontractors (GPS) | No levy | Payments to GPS subcontractors (paid without deduction) are excluded from the levy base |
The higher rate for net-paid CIS subcontractors (1.25% versus 0.35% for PAYE staff) reflects the absence of employer National Insurance on those payments. GPS subcontractors are excluded from the levy base entirely.
The small-business exemption and reduced levy band
CITB provides relief for smaller construction businesses (verified against CITB.co.uk, June 2026):
| Total assessed wage bill | Levy position |
|---|---|
| Under £150,000 | No levy payable (full exemption) |
| £150,000 to £499,999 | 50% reduction on the levy that would otherwise be due |
| £500,000 and above | Full levy at 0.35% (PAYE) and 1.25% (net CIS subs) |
Important: even businesses below the £150,000 threshold must still file an annual CITB levy return. Failure to file results in CITB estimating your assessment, which is typically higher than your actual liability. Filing the return, even when you owe nothing, is the correct action.
Worked example: calculating the CITB levy
A plastering contractor employs three full-time employees on PAYE and regularly pays three labour-only CIS subcontractors. The assessed figures for the levy year are:
| Category | Assessed amount | Levy rate | Levy due |
|---|---|---|---|
| PAYE gross wages (3 employees) | £120,000 | 0.35% | £420 |
| Net-paid CIS subcontractor payments (3 subs) | £110,000 | 1.25% | £1,375 |
| Total assessed wage bill | £230,000 | ||
| Full levy before reduction | £1,795 | ||
| 50% small-business reduction (£230k is in the £150k-£499k band) | -£898 | ||
| Net levy payable | £897 |
This business is eligible for the 50% small-business reduction, which roughly halves the levy. If the business can claim grants for training carried out during the year, those grants further reduce the net cost.
CITB grants: reclaiming part of the levy through training
Registered CITB employers can claim grants for eligible training, which partially or fully offsets the levy paid. Grants are not automatic: you must claim them through the CITB online portal. Three main categories of grant are available (verified against CITB.co.uk, June 2026; specific amounts and eligible courses change periodically, so check CITB's grants pages before planning training):
- Short course grants. For CITB-approved short courses, including plant operator tests (CPCS), health and safety courses, and other short-duration training. The grant is paid per course completion.
- Qualification grants. For NVQs, SVQs and other construction qualifications at various levels. Both short and long qualifications can attract grants depending on the type and level.
- Apprenticeship grants. For employers who take on apprentices in approved construction apprenticeship frameworks in England, Wales and Scotland. Grant amounts vary by trade and level.
For the plastering contractor in the example above, with a net levy of £897, a single CPCS plant operator test grant and a part-qualification grant could reduce or eliminate the net cost. The value of grants depends on the training actually carried out: employers who plan training to align with CITB grant categories effectively convert their levy into funded training.
How the CITB levy interacts with CIS
The CITB levy and CIS overlap significantly but are not the same obligation. The key intersections are:
The levy base includes CIS subcontractor payments. Payments you make to net-paid (deduction-at-source) CIS subcontractors count towards your CITB levy assessment at 1.25%. This means that a contractor who pays a large amount of CIS labour has a higher levy base than their PAYE payroll alone would suggest. A business that primarily engages CIS labour rather than PAYE employees can find that CIS payments drive the majority of the levy liability.
GPS subcontractors are excluded from the levy base. Payments to subcontractors who hold Gross Payment Status are outside the levy calculation. This creates an indirect financial benefit of GPS for the paying contractor: not only do GPS-holding subs avoid the 20% deduction, but payments to them also do not attract the 1.25% CITB levy. For more on who holds GPS and the conditions, see our guide to Gross Payment Status.
The £3m CIS deemed contractor threshold is different from the CITB threshold. A non-construction business that spends £3 million or more a year on construction work becomes a CIS deemed contractor and must register for CIS (see our guide to deemed contractors). This is separate from the CITB registration question. A deemed contractor who is primarily not a construction business may not be within the CITB scope at all, because "wholly or mainly" in construction is the CITB trigger. The two thresholds are independent tests.
Registering for CIS does not register you for CITB. Many growing subcontractors correctly register for CIS when they start paying their own CIS workers, but do not realise that CITB registration is a separate requirement if the wage bill crosses the CITB threshold. The two registrations are with different bodies (HMRC for CIS, CITB directly for the levy) and neither automatically triggers the other.
Record-keeping for your CITB levy return
Your annual CITB levy return is based on the wages and CIS subcontractor payments from the previous tax year. You will need the following information to complete it accurately:
- Total PAYE gross wages paid to all employees in the levy year (from your payroll records or P60 summaries).
- Total payments made to labour-only (net-paid) CIS subcontractors in the levy year (from your CIS300 returns, which record each payment).
- Any payments made to GPS (gross-paid) CIS subcontractors (these are excluded from the levy base but should be recorded separately to demonstrate the exclusion).
- A breakdown of subcontractor payments by category if you engage both net-paid and GPS subcontractors.
Your monthly CIS300 returns (required under CIS for all subcontractor payments) are the most accurate source for the CIS payment figures on the levy return. Maintaining these returns accurately throughout the year also makes the annual CITB levy return straightforward to complete.
For more on maintaining CIS records and the monthly return obligations, see our guides to CIS contractor monthly responsibilities and CIS supply chain compliance and due diligence.
When to contact CITB directly
CITB's own guidance at citb.co.uk is the authoritative source for levy rates, grant amounts, and assessment procedures. Rates and thresholds are set annually by Levy Order and the figures in this guide should be verified against the current levy year before filing your return. Contact CITB at 0344 994 4455 or through citb.co.uk if you:
- Are uncertain whether your business falls within the "wholly or mainly construction" test.
- Have not registered but believe you should have been registered in prior years.
- Need to query an estimated assessment.
- Want to confirm which grant types and amounts apply to specific training you are planning.
If you want to understand where the CITB levy fits within your broader construction tax and compliance picture alongside CIS, Self Assessment and VAT, our guide to what the Construction Industry Scheme is provides the broader context.