Pay the Apprenticeship Levy

HMRC collects the Apprenticeship Levy through PAYE from employers across the UK.

Check what else counts towards your pay bill

If you pay for a worker's services through an intermediary, such as their personal service company, and the off-payroll working rules treat those payments as employment income, they count towards your pay bill too.

You still pay the levy if you already pay an industry training levy, such as the Construction Industry Training Board levy.

Check whether you are connected to other employers

The rules on connected companies and charities are the same as for the Employment Allowance. If you are connected, the pay bill threshold applies to your combined pay bill, even if no single employer in the group reaches it, and the group shares one annual allowance.

You decide how to split the allowance between your PAYE schemes and your connected companies or charities. Report the split the first time you have to pay the levy. You cannot change it during the tax year, even if you merge with or buy another company part way through. Unused allowance does not carry over to the next tax year.

Each connected company or charity reports and pays its own share of the levy through its own PAYE scheme.

Some arrangements have their own rules. A franchisor gets one allowance for all the franchises it controls. A joint venture owned 50:50 by 2 companies is not connected to either, so each of the 3 gets its own allowance. NHS trusts and other health service bodies follow the connected companies rules.

Work out what you owe each month

For the first month of the tax year, divide your allowance by 12 and take that from the levy rate applied to the month's pay bill. For each later month, work on the year to date: apply the levy rate to your total pay bill so far, subtract the allowance built up so far, then subtract the levy you have already paid. HMRC's Basic PAYE Tools will do this calculation for you, and most payroll software does it automatically.

Report the levy on your Employer Payment Summary

Start reporting at the beginning of the tax year if your pay bill was over the threshold last year or you expect it to be this year. If it rises above the threshold unexpectedly, start reporting from that point. Once you have started, keep reporting until the end of the tax year, even if the pay bill finishes below the threshold.

On each Employer Payment Summary, give the share of the annual allowance you have given to that PAYE scheme and the levy you owe for the tax year to date. If you do not have to pay the levy in the current tax year, you do not report it.

Correct any change to your pay bill on your next Employer Payment Summary. If you find an error after the tax year ends, send an extra Employer Payment Summary with the right figure for the whole year and pay what you owe.

Pay the levy and keep records

The levy is part of your monthly PAYE bill, so you pay it with your income tax and National Insurance by the usual deadline. If you overpay during the year, HMRC refunds you as a PAYE credit. Levy payments are a deductible expense for Corporation Tax.

Keep the records you used to work out the levy for at least 3 years after the end of the tax year they relate to.