The Department for Business Innovation & Skills has updated its guidance on the how the Apprenticeship Levy will work. The levy, which will be introduced on 6 April 2017, applies to all employers operating in the UK that have an annual pay bill of over £3 million.

CTG has also been contacted by HMRC to clarify the position in relation to connected companies and charities.  The original proposal was that if a group of companies or charities were connected then only one of them could claim the allowance because the Department for Business Innovation & Skills followed the approach of the employment allowance.

However, as a result of a number of representations made by CTG and others, HMRC has concluded that applying the rules in this way would lead to a significant increase in the employer population subject to the levy which was never the intention of the policy.  The Government will put down an amendment to the Finance Bill to allow a group of connected employers to decide what proportion of the levy allowance each employer in the group will be entitled to. This decision must be taken at the beginning of the tax year and will be fixed for that tax year.

HMRC is to give further consideration to the possibility of allowing an employer (whether connected or not) to split the allowance across its PAYE schemes.

This is only one in a series of publications. DBIS will be publishing further tranches of guidance on the levy in June, October and December 2016.