As an employer, you may have to pay the new apprenticeship levy (AKA tax) from 6 April 2017 if:
- You have an annual pay bill of more than £3 million, and
- You 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.
Pay bill includes:
- All employees earning below the Lower Earnings Limit and the Secondary Threshold;
- Employees under the age of 21, and
- Apprentices under the age of 25.
This new tax will cost all qualifying employers ½% of their total pay bill after a £15,000 annual credit. We will calculate this liability for you, deduct one twelfth of the annual £15,000 allowance and add it to your HMRC summary of amounts owed.
Are you affected?
Many of you will not be affected but we need to establish who is liable. If your pay bill last year was below £3m and is unlikely to grow AND you have no associated or common control employers, then you can move along.
HOWEVER, you must consider all associated companies which means, “The pay bill of all companies in the same group and the pay bill of any companies under common control.”
We are not in a position to be able to assess this for you. We simply do not have the information or the context.
We have issued a questionnaire to assist us in getting your treatment correct. Please do not ignore it. If you are unsure how to complete it, please consult your accountant for assistance.
If you do not return it to us or if it is not complete – you may end up with additional liabilities for failure to properly account for this new levy. Sorry, we are just the messenger. I assume that the Office of Tax Simplification had a month off when they dreamt this one up.