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5. How do I tell HMRC that I'm turning on the Apprenticeship Levy?

EPS: Apprenticeship Levy3:20

"How do I tell HMRC that I'm turning on the Apprenticeship Levy?"

The Apprenticeship Levy setting is something you need to turn on once your "annual wage bill" reaches £3 million per year for all your pay batches, or connected companies.

To tell HMRC that you've turned on a pay batch's Apprenticeship Levy:

  1. First, select the pay batch on: "Menu", then "Pay batches"
  2. Then tap: "Forms", then "EPS monthly"
  3. Once the EPS monthly is open, check Apprenticeship Levy.
  4. If it says that it's "currently turned off", tap the blue Apprenticeship Levy settings link.
  5. And set Apprenticeship Levy to: "Yes ... paying Apprenticeship Levy"
  6. You only need to turn it on if your "annual wage bill" is more than £3 million per year for all your pay batches, or connected companies.
  7. From now on 1st Money automatically calculates your: "Levy due YTD"
  8. Also, if you want to change the default £15,000 "Annual allowance" tap the "Edit" button:
  9. Then drag the slider, and tap: Save
  10. And finally, if you're all ready to send it to HMRC, tap: File with HMRC (at the bottom)

For advanced usage:

  • Apprenticeship Levies are a tax that employers pay direct to HMRC once their "annual wage bill" reaches £3 million per year.
  • The amount of levy you pay is half a percent of the part of your company's "annual wage bill" that's over £3 million per year.
  • Which means that the half a percent of the part that's under £3 million per year, is the allowance.
  • In other words, you get a maximum allowance of £15,000, which you can decide to split between your pay batches, or connected companies.
  • HMRC's definition of a connected company includes any entity that's using the same: "Employer PAYE reference"
  • In most cases, if it's your only pay batch, apply the full £15,000 "Apprenticeship Levy allowance" to the current pay batch.
  • Then each month when your Apprenticeship Levy amount is calculated, the following happens.
  • First, half a percent of the value of the month's "wage bill" is calculated.
  • Then one month's worth (1/12th) of your "Apprenticeship Levy allowance" to is taken off.
  • The remaining amount becomes that month's Apprenticeship Levy, to be paid to HMRC.

Keep in mind that:

  • Once you turn on Apprenticeship Levy, you'll have to file Apprenticeship Levy every month, even if the "Levy due YTD" is £0.00.
  • Also, if you're using the entire "Apprenticeship Levy allowance" of £15,000 in one of your other pay batches, or connected companies, drag the slider to set it to £0.
  • If you overpay, or underpay, when you reach the end of the tax year, HMRC balances out your final calculation with a refund or payment request.

To learn more:

  • About connected companies, go to GOV.UK.

And that's it! That's everything you need to know about telling HMRC that you've turned on a pay batch's Apprenticeship Levy!

Updated: Thu, Oct 19, 2023.

© 2020–2024 1st Money UK Holdings Ltd. All rights reserved.
www.1st.money/help/Payroll/EPS_Employer_Payment_Summary/5._How_do_I_tell_HMRC_that_I'm_turning_on_the_Apprenticeship_Levy