HMRC internal manual

Apprenticeship Levy Manual

ALM12050 - Specific sectors and employees: public bodies

Public bodies (e.g. Central government departments, local authorities, universities) have a liability to pay the Apprenticeship Levy where their annual pay bill is over £3 million.

However, the structures of public bodies can be wide ranging, so public bodies need to consider whether any connections exist within their wider structure, for example any companies which may be considered as connected because they are under the control of the public body.

There are no specific rules that connect public bodies to each other, if they are neither companies nor charities. This means that such a public body will be able to use the full annual allowance of £15,000.

The definition of a company is wide-ranging and set out in section 101(18) of the Finance Act 2016, and section 1121(1) of the Corporation Tax Act 2010. It includes any bodies corporate and unincorporated associations, and limited liability partnerships. This definition can encompass bodies set up by royal charter and can include the non-departmental public bodies, agency, arm’s length body or subsidiary of a public body. 

Any entities which are owned, or controlled by, a public body could be connected for Apprenticeship Levy and therefore liable to share an allowance.  Due to the varied nature and organisation of public bodies each body needs to consider their entities on their own merits.  Guidance on the connected rules can be found at ALM11000.

It should be noted that some public bodies (such as Universities and Multi Academy Trusts) are classified as charities and so the connected charities rules will apply in those circumstances.

See ALM15000 for information relating to schools.

NHS Foundation Trusts, as well as certain other NHS bodies including NHS Trusts and NHS Boards, are companies for the purposes of the Apprenticeship Levy connected rules, see ALM12300. This means that each of them and any companies they are connected to will have one annual levy allowance of £15,000 to share across their group.

Please see the examples below demonstrating some of the rules in practice:

Example 1

Central government department A and B, which are not linked to any other entities, will be able to each have an annual allowance of £15,000.

ALM12450 provides additional information on government departments and their agencies.

Example 2

Public Body A, has three arm’s length bodies, B, C and D. All are companies which Public Body A has ultimate control over, making all strategic decisions and appointing all directors.

A - receives a full £15,000 levy allowance

B, C and D – are all connected so share a £15,000 levy allowance

Example 3

Public Body A, has set up 2 separate companies which are not linked in any way, B and C. A has no control or legal authority over any decisions made by B and C.

A, B and C all receive their own £15,000 allowance