A new Apprenticeship Levy is due to come into effect in April 2017
When you need to pay it
As an employer, you’ll have to pay the Apprenticeship Levy each month from 6 April 2017 if you have an annual pay bill of more than £3 million or are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million.
Your annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions (NICs) such as wages, bonuses and commissions.
How much you need to pay
Employers will have an Apprenticeship Levy allowance of £15,000 each year. Connected companies or charities will only have one £15,000 allowance to share between them.
The allowance reduces the amount of Apprenticeship Levy you have to pay by £15,000 across the year. This means that only employers with an annual pay bill of more than £3 million will pay the levy.
You can’t carry over any unused allowance into the next tax year.
Calculate what you owe
Apprenticeship Levy is charged at 0.5% of your annual pay bill, less the annual allowance. It is due whether you hire apprentices or not.
Industry training levy contributions
You’ll still need to pay Apprenticeship Levy even if you already contribute to an industry-wide training levy arrangement, for example the Construction Industry Training Board Levy.
Report how much you owe
From 6 April 2017, you’ll need to tell HMRC how much Apprenticeship Levy you owe each month:
- from the start of the tax year if:
- your annual pay bill (including any connected companies or charities) in the previous tax year was more than £3 million
- you think your annual pay bill (including any connected companies or charities) for the tax year will be more than £3 million
- if your annual pay bill (including any connected companies or charities) unexpectedly increases to more than £3 million – start reporting when this happens
If you’ve started paying Apprenticeship Levy, you’ll need to continue reporting it until the end of the tax year even if your annual pay bill turns out to be less than £3 million.
Report your Apprenticeship Levy each month using your Payment Summary (EPS) and include the following:
- the amount of the annual Apprenticeship Levy allowance you’ve allocated to that PAYE scheme
- the amount of Apprenticeship Levy you owe to date in the current tax year
You must keep records of any information you have used to calculate your levy payment for at least 3 years after the tax year which they relate to.
Changes to your pay bill
Report any changes to the Apprenticeship Levy as a result of changes to your pay bill on your next EPS.
If you find errors in your total annual pay bill at the end of the tax year, you must submit an extra EPS with the correct Apprenticeship Levy for the full tax year and pay what you owe.
How to pay
You’ll need to pay the Apprenticeship Levy each month through the PAYE process in the same way you pay Income Tax or National Insurance contributions.
Apprenticeship Levy payments are a deductible expense for Corporation Tax.
Accessing your levy money using the apprenticeship service
Once you have declared the levy to HMRC, you will be able to access funding for apprenticeships through a new apprenticeship service account.
For further information or assistance, please contact our payroll and outsourcing team on 0113 2574506.