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HMRC internal manual

Apprenticeship Levy Manual

Apprenticeship Levy Allowance: unused levy allowance

Part 6 Finance Act 2016

Income Tax (Pay As You Earn) Regulations 2003

Any unused allowance not used in a month will be carried over into the following month.

The example below shows a seasonal pay bill and the effect of unused levy allowance being carried forward into future months. The total annual pay bill is £3 million, and the pay bill fluctuates with a peak in June and July (month 3 and 4).

    Cumulative        
             
 Tax month Pay bill Pay bill Pay bill x 0.5% Allowance Levy Levy paid per month
1 £200,000 £200,000 £1,000 £1,250 £0 £0
2 £200,000 £400,000 £2,000 £2,500 £0 £0
3 £500,000 £900,000 £4,500 £3,750 £750 £750
4 £500,000 £1,400,000 £7,000 £5,000 £2,000 £1,250
5 £200,000 £1,600,000 £8,000 £6,250 £1,750 -£250
6 £200,000 £1,800,000 £9,000 £7,500 £1,500 -£250
7 £200,000 £2,000,000 £10,000 £8,750 £1,250 -£250
8 £200,000 £2,200,000 £11,000 £10,000 £1,000 -£250
9 £200,000 £2,400,000 £12,000 £11,250 £750 -£250
10 £200,000 £2,600,000 £13,000 £12,500 £500 -£250
11 £200,000 £2,800,000 £14,000 £13,750 £250 -£250
12 £200,000 £3,000,000 £15,000 £15,000 £0 -£250
Total £3,000,000         £0

Unused allowance in one tax year, however, cannot be carried over into the next tax year. Where an employer has unused allowance at the end of the tax year, the resulting credit will be dealt with in the same way as any other PAYE credit. If they have any outstanding employer liabilities, it will be used to clear those liabilities with the oldest being cleared first. We do not tell an employer when money is reallocated - they should review their online PAYE account to see the current charge and payment position.

If there is still an overpayment, then we recommend that employers reduce their next PAYE payment so that they don’t have to contact us to arrange for a repayment. For information on claiming a refund, go to https://www.gov.uk/payroll-errors/correcting-payments-to-hmrc