The Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026

Published: Thu 23rd Jul 26

Establishes a statutory levy on employers within the engineering construction industry for three distinct periods covering 2026 through 2028.

It directs the Engineering Construction Industry Training Board to assess and collect payments based on employer emoluments and labor-only contract costs, while providing specific exemptions for small-scale employers and charitable organizations.

The Order applies to all employers engaged wholly or mainly in engineering construction activities in England, Wales, and Scotland.

Arguments For

The order states that the levy is necessary to encourage adequate training in the engineering construction industry.
Proponents, via the Secretary of State's framing, assert that the levy proposals make appropriate provision for exempting small employers who ought not to be burdened by the costs.
The document claims the levy is required to provide the Engineering Construction Industry Training Board with the funds necessary to meet its expenses.
The Secretary of State concludes that although some employers may pay more than 1% of their relevant emoluments, this level is appropriate in the circumstances.

Arguments Against

Assessing specific levy amounts may pose administrative challenges for employers who must distinguish between site employees and off-site employees across multiple establishments.
Legal scholars or affected parties might question the fairness of the 1% threshold exception cited by the Secretary of State.
Small firms operating just above the £275,000 or £1,000,000 exemption thresholds may face a relatively higher financial burden compared to much larger entities.
Ambiguity could arise in the classification of labor-only agreements when determining what constitutes 'incidental use of tools' versus 'provision of materials'.

Citation, commencement and extent

-(1) This Order may be cited as the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2026 and comes into force on the day after the day on which it is made.

(2) This Order extends to England and Wales and Scotland.

This section establishes the official name of the legislation and sets its commencement date as 22 July 2026.

It specifies that its legal jurisdiction covers England, Wales, and Scotland.

Interpretation

-(1) In this Order-

'assessment' means an assessment of an employer to the levy in respect of a leviable establishment;

'base period' is to be construed in accordance with article 4;

'the Board' means the Engineering Construction Industry Training Board;

'emoluments' means-

(a) all salaries, fees and wages,
(b) any gratuity or other profit or incidental benefit of any kind obtained by an employee, if it is money or money's worth, other than pensions contributions, and
(c) anything else that constitutes, or is intended to constitute, earnings of the relevant employment;

'employer', other than in article 3(2), means an employer in the engineering construction industry;

'the engineering construction industry' means-

(a) the activities of the engineering construction industry as specified in Schedule 1 to the Industrial Training Order; or
(b) activities-
(i) which fall within the description of activities in article 2(1) of the Employment Protection (Offshore Employment) Order 1976( 4 ) (excluding the activities described in article 2(2) of that Order), and
(ii) which would fall within the activities of the engineering construction industry as specified in Schedule 1 to the Industrial Training Order if they were carried out in Great Britain;

'the Industrial Training Order' means the Industrial Training (Engineering Board) Order 1964( 5 );

'labour-only agreement' means any agreement or arrangement (other than a contract of service or apprenticeship) between an employer and any other person, the purpose of which is wholly or mainly the provision of services (including any incidental use of tools) of such a person or any other person to the employer in their trade or business;

'leviable establishment' has the meaning given in article 5;

'the levy' means the levy imposed in respect of a levy period;

'levy period' is to be construed in accordance with article 3(1);

'off site employee' means an employee (including a person engaged under a labour-only agreement) other than a site employee;

'the relevant base period' means the base period for a particular levy period by reference to which the relevant emoluments are to be calculated;

'site employee' means an employee (including a person engaged under a labour-only agreement) the activities of whose employment take place wholly or mainly at a site where activities falling under paragraph 1(a)(i), (iii) or (iv) of Schedule 1 to the Industrial Training Order are carried on.

(2) In this Order, references to a leviable establishment starting or ceasing to be engaged in the engineering construction industry do not include instances where-

(a) a leviable establishment starts to be engaged in the engineering construction industry after, or ceases to be engaged in that industry because of, a suspension of activities of a temporary or seasonal nature, or
(b) the location of a leviable establishment changes but the establishment continues to be engaged in the engineering construction industry from the new location.

This section defines key terms used throughout the order, such as 'emoluments' (broadly covering pay and benefits) and 'labour-only agreement.' It distinguishes between 'site employees' working on construction sites and 'off-site employees,' which determines how the levy is later calculated.

It also clarifies that temporary work suspensions or simple changes in location do not count as an establishment starting or stopping its industry involvement.

Imposition of the levy

-(1) A levy is to be imposed in respect of each of the following levy periods-

(a) the period commencing with the day on which this Order comes into force and ending with 31st December 2026 ('the first levy period'),
(b) the period commencing with 1st January 2027 and ending with 31st December 2027 ('the second levy period'), and
(c) the period commencing with 1st January 2028 and ending with 31st December 2028 ('the third levy period').

(2) Subject to article 9, a person is liable to pay an amount by way of levy in respect of a levy period if that person is an employer in the engineering construction industry at any time in that period.

This section mandates the collection of a levy for three calendar periods: from late July 2026 through the end of 2026, all of 2027, and all of 2028.

Any person acting as an employer in the industry during these times is legally liable for the payment, unless they qualify for an exemption.

Base periods

-(1) The base period for the first levy period is the twelve months commencing with 6th April 2025.

(2) The base period for the second levy period is the twelve months commencing with 6th April 2026.

(3) The base period for the third levy period is the twelve months commencing with 6th April 2027.

This section defines the financial 'base periods' used to calculate the levy amount for each of the three active years.

For each levy year, the assessment is based on the 12-month period starting on 6 April of the preceding year.

Leviable establishments to be assessed

-(1) The Board must assess the amount of levy to be paid in respect of each leviable establishment of an employer.

(2) In this Order, 'leviable establishment' means an establishment engaged wholly or mainly in the engineering construction industry for a period (which need not be continuous)-

(a) consisting of a total of 27 or more weeks falling within the relevant base period, or
(b) in the case of a leviable establishment which started being engaged in the engineering construction industry during the relevant base period-
(i) falling within the relevant base period, and
(ii) consisting of a total number of weeks exceeding one half of the number of weeks in the part of the relevant base period starting with the day on which the leviable establishment started being engaged in that industry and ending with the last day of the relevant base period.

(3) In this article, an employer is to be treated as the employer of all persons employed at or from a leviable establishment during the relevant base period where-

(a) the employer owns or otherwise has responsibility for the leviable establishment on the last day of the relevant levy period, or
(b) where a leviable establishment ceases to be engaged in the engineering construction industry before the last day of the relevant levy period, the employer owned or otherwise had responsibility for the leviable establishment immediately before it ceased to be engaged in that industry.

This section requires the Board to assess every individual workplace or 'establishment' that is primarily engaged in the industry.

An establishment counts as leviable if it operated in the industry for at least 27 weeks of the base period, or for more than half its lifespan if it was founded during that period.

Liability belongs to the person who owns or is responsible for the establishment at the end of the levy period.

Treatment of leviable establishments as one establishment

The Board and an employer may agree that two or more leviable establishments of that employer be treated as one leviable establishment for the purposes of assessment of the amount of levy payable.

This section permits the Board and an employer to voluntarily combine multiple workplaces into a single unit for assessment purposes.

This administrative arrangement must be by mutual agreement.

Assessment of amount of levy

-(1) The amount of levy to be assessed in respect of site employees for each leviable establishment is 1.2% of (A + B - C).

(2) The amount of levy to be assessed in respect of off site employees for each leviable establishment is 0.33% of (D + E - F).

(3) In paragraphs (1) and (2) the following are to be excluded from all calculations-

(a) all payments made to company directors remunerated solely by fees;
(b) all payments under labour-only agreements to the extent that any payment is-
(i) in respect of the provision of materials, or
(ii) otherwise not in respect of the provision of services.

(4) If an amount calculated as a result of either paragraph (1) or (2) is negative, that amount is treated as zero for the purposes of paragraph (5).

(5) The amount of levy to be assessed in respect of each leviable establishment is the aggregate of the amounts calculated as a result of paragraphs (1) and (2).

(6) Where a leviable establishment ceases to be engaged in the engineering construction industry during a levy period, the amount of levy imposed in respect of the leviable establishment for that period is to be in the same proportion to the amount that would otherwise be due under this article as the number of days between the commencement of the levy period and the date of the cessation of engagement (both dates inclusive) bears to the number of days in the levy period.

This section provides the mathematical formulas for the levy: 1.2% for site-based employee costs and 0.33% for off-site employee costs.

The calculations account for direct wages and payments made under labor-only agreements, while subtracting payments received from other employers for similar services.

Directors' fees and payments for materials are excluded from the calculation.

Total amount of levy

The total amount of levy to be paid by an employer is the aggregate amount of levy for all leviable establishments of the employer.

This section clarifies that an employer's total bill is the sum of the individual assessments for all their workplaces.

It ensures that large employers with multiple sites pay a single consolidated levy amount.

Exemptions

-(1) An employer in whose case the aggregate of-

(a) all emoluments of all persons who are site employees employed at or from the leviable establishments of the employer under a contract of service or apprenticeship in the relevant base period, and
(b) all sums (including payments for the incidental use of tools) paid in the relevant base period by the employer to any person under labour-only agreements for services rendered to the employer by site employees,

is less than £275,000 is exempt from payment of all amounts of levy calculated in respect of site employees under article 7(1).

(2) An employer in whose case the aggregate of-

(a) all emoluments of all persons who are off site employees employed at or from the leviable establishments of the employer under a contract of service or apprenticeship in the relevant base period, and
(b) all sums (including payments for the incidental use of tools) paid in the relevant base period by the employer to any person under labour-only agreements for services rendered to the employer by off site employees,

is less than £1,000,000 is exempt from payment of all amounts of levy calculated in respect of off site employees under article 7(2).

(3) The persons and payments listed in article 7(3) as those to be excluded from all calculations in paragraphs (1) and (2) of article 7 are also to be excluded from all calculations in paragraphs (1) and (2) of this article.

(4) Any body of persons or trust established for charitable purposes only is exempt from the levy.

This section exempts smaller employers from the site-based levy if their relevant costs are under £275,000, and from the off-site levy if costs are under £1,000,000.

It also grants a total exemption to registered charities.

These thresholds serve to exclude employers with low total payroll and contract spending from the financial obligation.

Assessment notices

-(1) The Board must serve an assessment notice on every employer assessed to the levy.

(2) An assessment notice may comprise two or more assessments.
(3) An assessment notice must state-
(a) the total amount of levy payable by the employer under the assessment notice,
(b) where the assessment notice comprises two or more assessments, the total amount of levy payable by the employer in respect of each assessment,
(c) whether each assessment is based on-
(i) information submitted by the employer to the Board, or
(ii) a reasonable estimate by the Board of the employer's liability to levy,
(d) the methods of payment of the levy which the Board will accept, and
(e) the addresses for service of a notice of appeal and an application for an extension of time for appealing.

This section regulates how the Board notifies employers of their debt.

Notices must include the total amount due, whether the figure is an estimate or based on employer data, and instructions on how to pay or appeal the decision.

Withdrawal and Amendment of assessments

-(1) In order to withdraw an assessment the Board must serve a withdrawal notice on the relevant employer...
-(1) In order to amend an assessment the Board must serve an amended assessment notice on the relevant employer.

These sections (11 and 12) authorize the Board to cancel or change a previous levy assessment.

The Board must provide formal written notice for any such adjustment, which then updates the employer's legal liability.

Service of notices

Notices under articles 10, 11 and 12 must be in writing and served on an employer assessed to the levy by- delivering the notice to the employer personally, delivering the notice to the employer's last known address, place of business or registered office, sending the notice by post... or sending an electronic copy of the notice to that e-mail address.

This section defines the legal methods for delivering levy-related documents.

It permits personal delivery, standard mail, or email if the employer has previously agreed to electronic communication.

Time at which payment becomes due and recoverable

-(1) The amount of levy payable under an assessment notice is due and payable by the employer on the last day of a period of one month beginning with the date of service of the assessment notice...

(4) Any amount payable by an employer by way of the levy- (a) is not recoverable by the Board during any period in which that employer has pending either- (i) an appeal against the levy, or (ii) a request to allow more time to appeal.

This section sets a standard payment deadline of one month after the notice is served.

It also prohibits the Board from taking legal action to recover the money while a formal appeal or a request for more time to appeal is being processed.

Time to appeal

For the purposes of section 12(4) of the Industrial Training Act 1982, the time within which an employer assessed to the levy may appeal to an employment tribunal against the assessment is- (a) one month beginning with the date of service of the assessment notice...

This section establishes the timeframe for an employer to challenge a levy bill through an employment tribunal.

The default window is one month, though extensions can be granted by the Board or the tribunal.

Certificate of payment

-(1) An employer may request a certificate from the Board as evidence that the employer has paid all sums due...

(2) The Board must issue a certificate to an employer when- (a) the Board has received a request for a certificate from an employer, and (b) all sums due under the relevant notice have been paid by that employer.

This section gives employers the right to receive official proof of payment once they have cleared their levy balance.

The Board is legally required to issue this certificate upon request.

View Source

Education Justice Labour Local Government