Press Release: Apprenticeship levy offset must be easy to claim for small employers, say LITRG

Published on 25 November 2015

The Chancellor announced today that an apprenticeship levy, set at a rate of 0.5% of an employer’s paybill will be introduced in April 2017. Theoretically only large employers will be paying it, however in practice, many more employers – particularly small or micro employers – may find themselves contributing if the £15,000 ‘offset’ is not easy to understand or claim. 

As announced by the Chancellor in today’s spending review, the apprenticeship levy will be set at a rate of 0.5% of an employer’s pay bill and will be paid through the Pay As You Earn system. However, each employer will receive an allowance of £15,000 to offset against their levy payment, meaning, theoretically, the levy will only be paid on any pay bill in excess of £3 million.

This will be a welcome announcement to smaller employers – many of whom are no doubt already struggling with ever increasing employment costs. However, if the £15,000 allowance is anything like the Employment Allowance (which employers can claim to reduce their employers National Insurance bill), it will be necessary to tick a box in either the payroll software or on the paper equivalent form to claim the allowance and negate the levy.

On this, Anthony Thomas, Chairman of the Low Incomes Tax Reform Group (LITRG), says:

“There is almost certain to be the same general lack of awareness about the apprenticeship levy allowance as we saw with the Employment Allowance. Therefore if employers have to ‘opt-out’ rather than having the allowance applied automatically, they may well pay over more than they need to.

“We therefore urge the Government to ensure the availability of the £15,000 allowance is as well publicised as possible and make it crystal clear to employers – particularly small employers such as care and support employers who, in our experience, struggle to keep up with constant changes to the requirements of running a payroll – what they need to do to claim the allowance.” 

(25-11-2015)

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