Connected charities – Apprenticeship Levy

Apprenticeship Levy legislation originally introduced a connected charities rule mirroring the test used for the Employment Allowance and the Gift Aid Small Donations Scheme (GASDS). This would have meant that if a group of companies or charities were deemed connected then only one of them could claim the allowance.

As a result of a number of representations made by CTG and others, however, HMRC has concluded that applying the rules in this way would have led to a significant increase in the employer population subject to the Levy, which was never the intention of the policy.  The Government put down an amendment to Finance Bill 2016 to allow a group of connected employers to decide what proportion of the Levy allowance each employer in the group would be entitled to.

At the beginning of the tax year, a group of connected charities will be able to split their single £15,000 allowance across their paybills. This allocation must be reported to HMRC and will be fixed for that tax year. This means, in effect, that groups of connected employers with a joint annual paybill of less than £3m will not be required to pay the Levy.

Single employers with multiple PAYE schemes will be able to spread their £15,000 allowance likewise.

The test for deciding whether two or more charities are connected is the same as that for the Employment Allowance and the GASDS. For more information and a series of worked examples, click here.

For further information or to find out if you are required to pay the Apprenticeship Levy, consult the Department for Education guidance.

Get email updates on Apprenticeship Levy

Latest on Paying the Apprenticeship Levy

Tax updates

No content has been posted here yet.