We previously reported on draft legislation to be included in the Finance Bill 2016, to introduce an apprenticeship levy of 0.5% of an employer's annual payroll bill. The draft legislation provides that employers have a levy allowance of £15,000, which means that they will only pay the levy where their annual payroll bill exceeds £3 million.
As drafted, where a group of companies or charities are connected, they must allocate the whole of the £15,000 allowance to one of the companies or charities only. Two companies or charities will be connected if one of them has control of the other or if both are under the control of the same person(s).
However, this has now been amended and the Department for Business, Skills and Innovation has now revised its guidance accordingly: connected employers will be permitted to split the levy allowance between them.
The decision of how to apportion the allowance must be taken at the beginning of the tax year and will be fixed for that tax year. Each employer will then calculate what they have to pay, taking into account their portion of the allowance.
HMRC has also published a useful policy paper on the apprenticeship levy, containing a description of the measure and its impact.
The apprenticeship levy is due to come into force on 6 April 2017.