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.
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