The government has published the first draft of the regulations implementing the apprenticeship levy. The regulations will amend the Income Tax (PAYE) Regulations 2003. The purpose of this initial package of draft regulations is to set out how employers or those who run payroll services will calculate, report and pay their levy liability. Additional draft regulations will be published shortly.
By way of recap, employers will only pay the apprenticeship levy if they have a pay bill of more than £3 million each year. As such, less than 2% of UK employers will have to pay the levy. The apprenticeship levy will be charged at a rate of 0.5% of the annual pay bill. However, employers will have a levy allowance of £15,000 to offset against their levy liability.
The draft regulations provide that employers will need to engage with reporting obligations if their pay bill exceeds £2.8 million in the previous tax year or is expected to reach £3 million in the current tax year.
The government is now seeking views on whether the draft regulations achieve their objectives as set out in the legislation and associated guidance and to confirm that there are no unintended consequences. The consultation closes on 14 November 2016.