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HMRC internal manual

Apprenticeship Levy Manual

Pooled PAYE schemes: examples

Example 1

A pooled PAYE scheme contains 3 individual employers, who are not treated as connected to each other or to any other employer. Each employer can therefore benefit from the full £15,000 levy allowance.

Employer A has a pay bill of £1 million annually

Employer B has a pay bill of £4 million annually

Employer C also has a pay bill of £4 million annually

As Employer A has a pay bill that is smaller than £3 million annually, they do not need to do anything.

As Employers B and C have a pay bills that are greater than £3 million annually, they will be liable to report and pay the levy. To ensure that the levy they pay can be accurately allocated to their digital apprenticeship accounts, they should split from the pooled PAYE scheme and set up their own schemes before April 2017.

Example 2

A pooled PAYE scheme contains 3 individual employers, who are not treated as connected to each other or to any other employer. Each employer can therefore benefit from the full £15,000 levy allowance.

Employer A has a pay bill of £1 million annually

Employer B has a pay bill of £1.5 million annually

Employer C has a pay bill of £4 million annually

As Employers A and B have pay bills that are smaller than £3 million annually, they do not need to do anything.

As Employer C has a pay bill that is greater than £3 million annually, they will be liable to report and pay the levy. To simplify the process of paying and reporting the levy, they may find it helpful to split from the pooled PAYE scheme and set up their own scheme before April 2017. However, as they are the only levy payer in their pooled PAYE scheme, any funds paid in levy can be allocated to their digital account. This means that if they would prefer not to split from the pooled PAYE scheme, they do not have to. When calculating the levy the levy paying employer will need to exclude unconnected employers who are part of the pooled PAYE scheme from the 0.5% levy calculation.