As you will be aware, the Apprenticeship Levy will be coming into force on 6 April 2017. The levy is charged at 0.5% of an employer’s payroll cost and a ‘levy allowance’ of £15,000 can be offset against the levy for those companies with payroll bills in excess of £3million. However, it is not just companies with payroll bills currently in excess of £3million which need to be aware of this. It also affects:
Connected Companies
Please be aware that connected companies are only entitled to one allowance collectively. The allowance can be allocated between the connected companies as you wish. Please note that this split must be determined at the start of the tax year and you will need to report how you have allocated that allowance the first time you are required to pay the Apprenticeship Levy. You cannot change your share of the allowance during the tax year. If the structure of your group changes within the year, or your payroll costs fall below £3million, you must continue to apply the levy allowance that was allocated at the beginning of the tax year; any changes can only be made at the start of the following tax year.
Companies where payroll anticipated to exceed £3million in the year
If you forecast that your payroll bill will exceed £3million at some point in the year, then you are required to sign up for the apprenticeship levy at the start of the year. HMRC do, however, appreciate, that it is not always possible to forecast such situations. Where this is the case, HMRC require that you start reporting as soon as this happens.
How to report
The Apprenticeship Levy must be reported each month using your Employment Payment Summary (EPS). Connected Companies must make their declarations through their own payroll; it cannot be dealt with on a group basis. Your payroll provider will be able to help with this.
Any Apprenticeship Levy payments due must be paid monthly through the PAYE process, in the same way that Income Tax and National Insurance contributions are paid.
You must keep records of any information used to calculate your levy payment for at least 3 years after the end of the tax year they relate to.
Managing The Apprenticeship Levy
The Department for Education and Skills Funding (SFA) are encouraging large employers to sign up and register for the apprenticeship service. The apprenticeship service is an online digital system designed to support the apprenticeship levy. You can use it to do the following:
- add organisations
- link your PAYE schemes
- invite members of your team to use the service
- add or amend information about apprentices and training
- authorise payment to the training provider
- view payment activity in your account and view your balance
- pause or stop a payment to your training provider
Click here to visit the apprenticeship service website.
The Apprenticeship Levy has been designed to incentivise employers to take on apprentices and invest in the UK’s future workforce; however it does come with some additional compliance requirements. If you need any additional guidance in this regard please get in touch with me or one of the team.