More details are beginning to emerge about how the Apprentice Levy will be administered. The government issued guidance at the end of last week that gave some explanation of how the levy will work.
In summary, the draft regulations include:
- set out that an employer is required to assess their annual pay bill amount for the previous and current tax year to decide if they are liable for the levy
- make provision for the levy to be paid by the 19th (or 22nd if the employer reports electronically) of the following month
- place a requirement on employers to notify HMRC of the levy which is to be paid and make provision for the information which should be included in this return
- set out how to calculate the monthly levy allowance on a cumulative basis, in order to calculate levy liability (see below)
- allow both single and employers who are part of a group to apportion the annual levy allowance between multiple PAYE schemes (provided this is notified to HMRC in the first month of the tax year)
- make provision for recovery of overpaid levy by the employer
The regulations confirm that the annual levy allowance will operate on a monthly cumulative basis, so the levy allowance will increase evenly throughout the year. For example, where an employer has an annual levy allowance of £15,000 and applies this to a single PAYE scheme, this would mean an allowance of £1,250 a month.
Any unused allowance will be carried over from one month to the next. If the levy liability in month 1 is £1,000 the employer won’t pay the levy and the allowance in month 2 will be £1,500. At the end of the tax year, if the levy has been overpaid, the employer can use the overpayment to offset against their other PAYE liabilities. More details can be found here.
Last week Conservative MP Alan Mak spoke of his commitment to apprenticeships, alongside Skills Minister Robert Halfon, who had delivered a similar message.
The consultation period for the levy ended last month.