Government reforms (2): Apprenticeship levy

What do we already know?

We updated you in our October 2016 Newsflash Apprenticeship levy that HMRC had published the first set of draft regulations for the calculation, payment and recovery of the Apprenticeship Levy, for a period of technical consultation, available here.

What’s new?

HMRC has published, for further technical consultation, updated draft regulations for the apprenticeship levy.

The draft regulations, available here, have been updated to incorporate drafting comments received during the technical consultation (referred to above). They have also been extended to cover the assessment and recovery of underpaid levy by HMRC and record keeping by employers.

In particular, the regulations:

  • clarify that an employer need only report to HMRC where in the preceding tax year it had, or in the current tax year expects to have, a pay bill over £3 million. The reporting threshold has increased from £2.8 million in response to comments made during the original consultation. They also clarify how the reporting threshold works where the annual allowance has been allocated between group companies;
  • confirm that the annual levy allowance will operate on a monthly cumulative basis and provide that an employer with multiple PAYE schemes that does not use the full annual allowance will be able to offset the unused amount against another scheme after the end of the tax year; and
  • cover recovery of debts from managed service companies (so the provisions which currently apply to PAYE debt will also apply to levy debt).

The regulations also extend the scope of the levy to continental shelf workers certificate holders.

HMRC is seeking comments by 3 February 2017 on whether the draft regulations achieve the objectives set out in the consultation document and whether they have any unintended consequences.