Payroll insight
DAS – England only My colleague Jason has written about the digital apprenticeship service (DAS) in his article (page 12), so all that I need to add is that the first remittance made in tax month 1 (for April 2017) will be credited a few days after payment. Levy-paying employers will be able to see their first credit in their DAS account from May 2017. Though the apprenticeship levy will be payable by all employers across the UK only the amount that an employer has available to them to spend in England will be allocated to their DAS account. HMRC plans to calculate how much an employer will have to spend using data that it holds about the home address of employees. This data will establish what proportion of the pay bill will be paid into the DAS account. The assessment is due to be made in early 2017 – exact date to be announced. Each levy credit will receive a 10% top-up. ...the employer has 24 months to use the funds before they expire and return to the Government... In January 2017, HMRC will have made contact with all employers it identifies as likely to need to open a DAS account. If you think your employer will be a levy- paying employer and you haven’t heard from HMRC directly then visit GOV.UK to see what steps you will need to take. Once funds have been credited to the DAS account, the employer has 24 months to use the funds before they expire and return to the Government to help fund its ambition for 3,000,000 apprentices by 2020. The earliest credits will be used first when paying apprenticeship training providers. Employers will be reminded when their funds are due to expire. Co-investment Fewer than 2% of all employers will be liable to pay the apprenticeship levy in 2017–18, which leaves a lot of non-levy paying employers. For these employers, the digital apprenticeship service will not be used to pay for apprenticeship training and assessment until at least 2018.
throughout the year even where, during the year, a merger or acquisition occurs or the structure of the group of connected companies or connected charities changes. Changes can be made the beginning of the following tax year if deemed necessary. ● Multiple PAYE schemes – Many employers have several PAYE schemes to aid their PAYE administration; in this situation an employer is free to allocate the levy allowance across the schemes as preferred at the beginning of the tax year. Employers will need to report how they have allocated the allowance in each employer payment summary (EPS) submitted throughout the tax year. As with connected companies and charities, once allocated the amount cannot change in-year. ● Local authorities and schools – Public bodies are not generally affected by the rules on connected companies. Each local authority will be allocated a levy allowance of £15,000 that covers the employees of maintained schools because the local authority is the employer. The governing body is the employer for voluntary-aided schools, foundation schools and academies and each will be entitled to the full £15,000 allowance. Multi-academy trusts are a single employer and will have a single full allowance. Where a school becomes an academy part-way through a tax year, the academy’s governing body will be responsible for the apprenticeship levy from this point and will get the full allowance. Reporting and payments In order to report the levy payment, employers will follow their normal payroll process using the EPS either in their own payroll software package or in HMRC’s Basic PAYE Tools (BPT). Once an employer levy begins to submit a levy payment, they will need to continue making submissions, even if the levy amount year to date figure for any subsequent months becomes zero. The apprenticeship levy will be paid each month alongside all other PAYE remittances; so the first payment will be due by 19 May (or 22 May, if using an approved electronic method). In the event that the levy is overpaid during the year, the employer will receive a refund as a PAYE credit.
Co-investment will see non-levy paying employers make a 10% contribution to the cost of this training paid directly to the training provider with the Government paying the remaining 90% up to the maximum amount of Government funding available for that apprenticeship. What now? Though 0.5% doesn’t seem to be much, it is enough when your pay bill is in excess of £3 million and even more so where you are a local authority maintained school that gets no allowance of its own; as we saw above, only one amount of levy allowance is available to the local authority. Furthermore, medium-term budgets have already been set without a thought to paying this amount. The same challenge applies for connected companies and charities that will also have little or no allowance of their own. If your employer hasn’t already done so, then now is the time to revisit budgets and consider the impact that this cost will have e.g. on cash flow. I’m sure you have already read all newsletters and communications from your payroll software developer to familiarise yourself with the usual updates for the coming tax year, but this year, with this new element being added in to PAYE processes, there is an even greater need to prepare and plan. Does your software produce the EPS or do you use BPT? What information does it need from you and when? Read the updates and don’t put off testing your new tax year product. Consider the complexities of multiple PAYE schemes and connected companies and charities. Communicate with all affected teams to ensure that if you are apportioning/allocating the levy allowance, everyone knows how much to include within their EPS. And, of course, is your employer going to use its payment? Will your employer maximise the spending opportunity the levy gives or will it simply go to fund someone else’s apprenticeship programme? We know that there are very different views in the employer community but now is the time to consider whether revisiting the concept of apprenticeships might be just the thing to do for the 2017–18 tax year. n
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Issue 27 | February 2017
| Professional in Payroll, Pensions and Reward |
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