Accentra make room for the Apprenticeship levy

From spring 2017, HM Government is making changes to the way apprenticeships in England are funded with the introduction of an apprenticeship levy on all companies with pay bills of more than £3 million per annum.

The apprenticeship levy is 0.5% of an annual pay bill, so a company with an annual pay bill of £3 million will owe £15,000 against which they can put their £15,000 annual allowance to bring their apprenticeship levy liability to zero. Group companies that are connected to other companies and charities for employment allowance purposes will have to individually declare their share of the £15,000 annual allowance. This declaration must be made at the beginning of each tax year and will remain fixed for that tax year. Due to the sharing of the allowance, some connected employers with a pay bill below the £3 million threshold will be required to pay a levy if their share of the allowance does not fully offset their liability, or if the group does not allocate any allowance to them.

The allowance operates on a monthly, cumulative basis. An employer with the full allowance will have a monthly allowance of £1,250 (£15,000/12). A connected employer will calculate what they have to pay each month, using their monthly portion of the £15,000 levy allowance.

The scheme requires companies (or grouped companies) whose annual pay bill is greater than this threshold, to report their compliance and payment through the Employer Payment Summary (EPS) section of Real Time information (RTI).

Always at the cutting edge of payroll software development and keenly aware of the latest legislation, the Accentra Payroll system has been modified to incorporate the apprenticeship levy ahead of its implementation in the tax year starting April 2017.  While submitting the EPS, users will be able to record the Levy and the Allowance used figures – very much like the CIS Deductions. The figures will be stored and reported to HMRC via EPS.

To learn more about how Accentra can keep your company abreast of Payroll legislation click here.