HMRC is facing calls from devolved ministers in Scotland, Wales and Northern Ireland to provide greater clarity around the introduction of the Apprenticeship Levy, due to be brought in from April 2017, following concerns about compliance costs and the potential to undermine existing devolved apprenticeship schemes and confuse cross border employers
The government has now released a four-week consultation on the draft legislation for the new apprentice levy for comment.
Announced at the Chancellor’s Autumn Statement, the Apprenticeship Levy will be charged at a rate of 0.5% of an employer’s paybill. Each employer will receive an allowance of £15,000 to offset against their levy, and HMRC says the levy will only be paid on annual pay bills in excess of £3m, and so less than 2% of UK employers will pay it.
HMRC’s impact assessment indicates the new levy will bring in £3bn for the Treasury by 2020/21.
The levy will be payable through PAYE and will be payable alongside income tax and national insurance. HMRC says to keep the process as simple as possible the ‘paybill’ will be based on total employee earnings subject to Class 1 secondary NICs.
There will be a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls will only be able to claim one £15,000 allowance to offset. In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service.
Employment and skills ministers from Scotland, Wales and Northern Ireland are attending a meeting today to voice their concerns about the impact of the levy.
These include the potential for the levy to undermine devolved apprenticeship policies; the best method for fairly apportioning the levy raised across the devolved administrations, including transparency around UK departmental budgets; and the need to ensure that the changing apprenticeship landscape will be clear to cross border employers and providers.
Roseanna Cunningham, cabinet secretary for fair work, skills and training, in the Scottish government said: “The introduction of the levy remains a matter of fundamental concern for us.
'It encroaches on our devolved responsibilities and is causing concern for employers. The UK government has no control over how our administrations provide apprenticeships and to imply otherwise by collecting what amounts to an employment tax is misleading for any employer with operations outside England.’
The deadline for feedback on the draft legislation is 2 March 2016 and details are here
