Following an 18-month consultation with industry and research with employers, the process has been designed by the Levy Working Party (LWP); a group of industry representatives tasked with looking at how the levy process can be simplified.
The new scheme will involve:
• Maintaining PAYE Levy at 0.5%
• Ending the increase of Levy on payments made to Net (taxed) CIS sub-contractors, using figures already provided by employers to HMRC
• Increasing the size of the small business levy reduction from £100,000 to £300,000
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• Removing the Labour-Only Payments Received offset mechanism, which affects less than 10% of all employers.
It is understood that all registered employers will receive a letter from next week to inform them of the changes, as well as the possible impact on their business.
Commenting on the process, Douglas Matthew, Head of Levy and Grant for CITB, explained: "The changes have come in response to feedback from employers. They told us that the current process is complicated, time-consuming and can lead to extra administration costs.
"More than 22,000 employers currently pay the Levy so it is important that we have the right system in place. Using figures provided by employers on their 2014 Levy Returns, we believe that under the new arrangements 84% of employers are likely to pay the same or less Levy.
"Where companies face an increase in their payments, we will work closely with them to help them through the transition."
CITB added that the changes will not be implemented until 2017 in order to allow employers time to prepare for the new arrangements.
Further details on the Levy simplification can be found here.
(JP/IT)
