The new Apprenticeship Levy comes into effect from April this year at a rate of 0.5% of the employer’s ‘pay bill’. To exclude smaller employers a £15,000 annual allowance can be claimed. The effect of this limit means that only employers with a pay bill in excess of £3 million will be required to contribute to the levy. The £3 million limit also applies to companies who are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million.Employers who aren’t connected to another company or charity will have an Apprenticeship Levy allowance of £15,000 each year. This means the Apprenticeship Levy you have to pay is reduced by £15,000 across the year. It is not possible for any unused allowance to be carried over to the following tax year. A new portal has been launched by the Skills Funding Agency for organisations that will be required to pay the levy from April 2017.HMRC has also published new guidance on paying the levy with specific advice relating to sectors including franchises, off-payroll working in the public sector, short-lived companies, managed service companies, employment or recruitment agencies, joint ventures and schools.The pay bill will be based on total employee earnings subject to Class 1 secondary NICs including wages, bonuses and commissions. This also includes earnings below the Lower Earning Limit and the Secondary Threshold as well as employees under the age of 21 and apprentices under the age of 25.Employers can choose how to split the allowance between PAYE schemes or with connected companies or charities. The allocation cannot be changed during the tax year. From 6 April 2017, employers will need to tell HMRC how much Apprenticeship Levy they owe each month using their Employer Payment Summary (EPS).Records relating to payment of the Apprenticeship Levy must be held for at least three years after the tax year to which they relate. The levy will be paid through the PAYE process in the same way as Income Tax or National Insurance Contributions. Any overpaid Apprenticeship Levy made during the tax year will be refunded as a PAYE credit. Apprenticeship Levy payments are a deductible expense for Corporation Tax. If you are liable to pay this levy, we would be happy to assist you in getting prepared.