Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal


Apprenticeship Levy draft legislation 5 February 2016

Draft legislation has been published introducing the new Apprenticeship Levy which will have effect from 6 April 2017.

Who does this legislation apply to? Employers across all four UK nations. Apprenticeships are part of skills training which is a devolved policy area meaning only employers in England will receive funds in their digital account to spend on apprenticeships training in England. It will be for authorities in Wales, Northern Ireland and Scotland to decide how the levy funding will be paid within their nation. It will be a Levy on employers to fund new apprenticeships. Legislation will be introduced in Finance Bill 2016 and will provide for a levy to be charged on employers’ paybills at a rate of 0.5%. The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance. The “paybill” will be based on total employee earnings subject to Class 1 secondary NICs. Each employer will receive one annual allowance of £15,000 to offset against their levy payment, which will mean the Levy will be payable on pay bills in excess of £3 million a year. There will be a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls will only be able to claim one allowance.

A Tax Information and Impact Note (TIIN) has also been published alongside an explanatory note .

Consultation responses

 Consultation outcome: Apprenticeship levy: employer owned apprenticeship training – 2 December 2015  CIPP response to the consultation on the apprenticeships levy - 1 October 2015

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Government provides more detail about the apprenticeship levy 24 March 2016

The government has published more information about the apprenticeship levy and how it will work. The levy will apply to all UK employers in both the private and public sectors.

It is payable on annual pay bills of more than £3 million. Employers with an annual pay bill of less than £3 million will not pay the levy. These employers will continue to have access to government funding to support apprenticeships. The levy will be charged at a rate of 0.5% of an employer’s pay bill. Levy payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), payable alongside tax and National Insurance. Pay bill will be based on total employee earnings subject to Class 1 secondary National Insurance contributions (NICs). There will be a £15,000 fixed annual allowance for employers to offset against their levy payment. A connected person rule, similar to the one used for the Employment Allowance, will mean that employers who operated multiple payrolls will only be able to claim one allowance for the levy.

Individual employers’ funding for apprenticeship training in England will then be made available to them via a new Digital Apprenticeship Service (DAS) account. Employers will be able to use this to pay for training for


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