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HMRC internal manual

PAYE Manual

Employer returns: apprenticeship levy: reporting process

Employers will report their levy liability using either their own software or HMRC’s Basic PAYE Tools.

To arrive at the monthly ‘pay bill’ the employer will add all of the employee earnings on which they are liable to pay Class 1 secondary NICs (from each of the paydays in the tax month) together.

Then, the 0.5% rate will be applied to this sum to calculate the levy liability for that tax month, before the monthly allowance is applied. Employers will offset the cumulative monthly allowance against the cumulative monthly levy liability in order to calculate the apprenticeship levy payable for each tax month.

For examples on how to manually calculate an employer’s levy liability manually go to the Apprenticeship Levy Manual.

In the normal reporting process, the employer should –

  • Run payroll then submit the FPS on or before the employees’ payday
  • Calculate the Apprenticeship Levy due
  • File the EPS by the 19 of each month with the amount of the annual levy allowance which the employer has allocated to that PAYE scheme, and the levy due
  • Make normal PAYE payment on or before  19 / 22 (cheque/electronic) of each month / quarter

Note: employers must take the allowance from the levy due before completing the EPS so the amount on the EPS is always the actual amount due. Unlike some other measures, the Apprenticeship Allowance cannot all be used in a single month. The amount claimed for the year should be divided by 12 months (so the full allowance of £15,000 would equate to a £1,250 allowance each month).

Note: if a customer sets up (or closes) a PAYE scheme part way through the year they can still claim the full annual levy allowance of £15,000: therefore setting up in Month 3 means the allowance claimed on their first reported period would be 3 x £1250.

More information is available on Gov.uk at Pay Apprenticeship Levy