5. How do I tell HMRC that I'm turning on the Apprenticeship Levy?
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"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:
- First, select the pay batch on: MenuPay batches
- Then tap: FormsEPS monthly
- Once the EPS monthly is open, tick Apprenticeship Levy.
- If it says that it's "currently turned off", tap the blue Apprenticeship Levy settings link.
- And set Apprenticeship Levy to: "Yes ... paying Apprenticeship Levy"
- 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.
- From now on 1st Money automatically calculates your: "Levy due YTD"
- Also, if you want to change the default £15,000 "Annual allowance" tap the "Edit" button:
- Then drag the slider, and tap: Save
- 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.
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!
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