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HMRC internal manual

Apprenticeship Levy Manual

Pay bill: what counts as pay bill

S100 Finance Act 2016

Pay bill is based on the total amount of earnings on which an employer is liable to pay Class 1 secondary NICs. This includes:

  • any remuneration or profit coming from employment such as wages, bonuses and commissions - payments from a registered pension scheme are not considered earnings for NICs purposes - a limited group of pension payments may be subject to class 1 NICs, if paid out of an employer-financed retirement benefits scheme
  • earnings below the Lower Earnings Limit (LEL) and the Secondary Threshold (ST)
  • earnings of employees under the age of 21 and apprentices under the age of 25 

Although employers do not pay Class 1 secondary NICs on the earnings up to the Upper Secondary Threshold (UST), of employees under the age of 21, or apprentices under the age of 25, they remain liable for the payment of Class 1 secondary NICs on those earnings even though the rate at which they would pay is 0%. As a result, these earnings should be included in the pay bill for Apprenticeship Levy purposes. 

Pay bill does not include any earnings on which the employer is not liable to pay Class 1 secondary NICs, so it does not include:

  • earnings of employees under the age of 16
  • earnings of employees not subject to UK NICs legislation
  • any payment which is not considered earnings for Class 1 NICs purposes, for example, benefits in kind which are liable to Class 1A NICs (e.g. company cars or private medical insurance)
  • any non-cash benefit within a salary sacrifice arrangement, which is not subject to Class 1 NICs
  • payments to employees working abroad where there is no Class 1 secondary NICs liability