The Department for Buisness Innovation & Skills has published further guidance on how the apprenticeship levy will work when it is introduced on 6 April 2017 (see www.bit.ly/1SYtZ88)
Connected companies and sharing the allowance
The original proposal was that if a group of companies or charities were connected then only one of them could claim the allowance. This followed the approach of the employment allowance.
However, following representations the government has concluded that this would lead to significant increase in the employer population subject to the levy. So it 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.
Cumulative vs up front allowance
The government has confirmed its original proposal that the allowance will be available cumulatively. It recognises concerns that this could lead to complexity in collection in certain situations. However, the overriding factor is that the purpose of the levy is to support apprenticeships; an upfront allowance will delay monies going into digital accounts for medium-sized firms. This in turn would lead those firms delaying starting apprenticeships, which is not the outcome that the government wants.
The government has said it will continue to work to ensure that only those employers who are likely to have a liability for the allowance at the end of the year will have to engage in reporting the levy.
The Department for Buisness Innovation & Skills has published further guidance on how the apprenticeship levy will work when it is introduced on 6 April 2017 (see www.bit.ly/1SYtZ88)
Connected companies and sharing the allowance
The original proposal was that if a group of companies or charities were connected then only one of them could claim the allowance. This followed the approach of the employment allowance.
However, following representations the government has concluded that this would lead to significant increase in the employer population subject to the levy. So it 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.
Cumulative vs up front allowance
The government has confirmed its original proposal that the allowance will be available cumulatively. It recognises concerns that this could lead to complexity in collection in certain situations. However, the overriding factor is that the purpose of the levy is to support apprenticeships; an upfront allowance will delay monies going into digital accounts for medium-sized firms. This in turn would lead those firms delaying starting apprenticeships, which is not the outcome that the government wants.
The government has said it will continue to work to ensure that only those employers who are likely to have a liability for the allowance at the end of the year will have to engage in reporting the levy.
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