Process apprenticeship levy

Solution Properties

Solution ID:

200427112355598

Last Modified Date:

Tue Mar 24 15:40:44 UTC 2026

Taxonomy Path:

Case category//How do I...//governmental/legislative compliance

Author:

[email protected]

Process apprenticeship levy

Description

If your annual pay bill exceeds £3 million, you're required to pay 0.5% of it into the apprenticeship levy. You have an allowance of up to £15,000 to offset against this.

You can submit any apprenticeship levy values to HMRC via the employer payment summary each period.

If you haven't reached the annual threshold for the apprenticeship levy yet, you can ▼ defer until you do.

Click Company, then Legislation.
Click the NI tab.
Click Edit beside Apprenticeship Levy Settings.
Select the checkbox beside Defer calculation until annual threshold is reached.
Click OK, then OK.

TIP:

If you're part of a group of connected companies with separate data for each company, you can split your allowance companies.

Moved software provider

Switching software providers mid year or manually entering year to date values can cause discrepancies in reports with apprenticeship levy reports. This includes the P32 report. We recommend the following:

Calculate the values manually, outside of the software, from the mid year point
Or, use the Rollback option. Then reprocess payroll from the start of the tax year and the software will calculate these values automatically

The annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions. For example, wages, bonuses, commissions. Go to GOV.UK to find out more.

Cause

Resolution

Check the Apprenticeship Levy liability

▼ How to check the Apprenticeship Levy liability on the P32 report

Click Tasks then Period End.
Click P32 Report and enter the range of tax months to include.
Click OK then click OK.
In box 20, check the Apprenticeship Levy value.

If there's a value in box 20, you must Submit an Employer Payment Summary (EPS) to notify HMRC of your Apprenticeship Levy liability.

▼ You can also check your Apprenticeship Levy liability within HMRC Payments

Click Company then click Settings.
Click HMRC Payments.
Check your Apprenticeship Levy values.

The values generate automatically when you run your P32 report.

TIP:

To enter the values manually, select the I want to enter these values manually checkbox. For example, if you've been processing in other payroll software during the tax year.

If you use Collector of Taxes, you can include your Apprenticeship Levy liability in the payment file that you upload to HMRC.

Find out more in our set up and use Collector of Taxes to pay HMRC electronically article.

Calculate the Apprenticeship Levy liability

To find out how to calculate Apprenticeship Levy, ▼ click here.

First, establish the 'gross for NIC for Apprenticeship Levy' to date.

To check this value, run the report using the steps below:

Select all employees then go to Reports.
Select the Employee category to the left.
Locate and double-click the Payment Summary History Part 2 - By Date (Inc Gross for NIC) report.
Check the Criteria Values options run the report for the whole tax year you're checking.
On this report, check the total under the Gross for NIC for Apprenticeship Levy column.

Note this value, as you use it later when you calculate year to date liability.

Annual allowance to date

Work out your Apprenticeship Levy allowance to date.

The standard annual allowance is £15,000. However, if you split the allowance between companies, use the allowance for this company only in the following calculations.

If required, you can ▼ check your annual allowance in your software.

Go to Company, then Legislation.
Go to the NI tab.
Select the Edit button beside Apprenticeship Levy Settings.
Note your Annual Allowance.
- If you enabled the Company Settings section here, note the value for This Company's Allowance instead

The calculation for your allowance to date is:

(Annual allowance / 12) x [tax month number you're checking]

Calculate year to date liability

Next, calculate the Apprenticeship Levy for the tax year to date:

(Gross for NIC for Apprenticeship Levy to date x 0.5%) - Apprenticeship levy allowance To Date = Apprenticeship levy liability To Date

You've now calculated the Apprenticeship Levy for the tax year to date.

Calculate liability for this period

The Apprenticeship Levy calculation for the current period is:

Apprenticeship Levy Liability To Date - Apprenticeship Levy liability already paid this tax year = Apprenticeship Levy liability This Period

You've now calculated the Apprenticeship Levy due in the current period.

Useful information

Sage 50 Payroll calculates the Apprenticeship Levy automatically and includes the value in figure 20 on your P32
The Apprenticeship Levy always works on a cumulative basis, similar to PAYE

Reconcile your Apprenticeship Levy

To reconcile the Apprenticeship Levy, read the earnings included in the Apprenticeship Levy liability calculation article.

Submit your Apprenticeship Levy liability

Let HMRC know the value of your Apprenticeship Levy liability.

Click e-Submissions then click Employer Payment Summary.
Select You are adjusting your payment to HMRC because: You are reporting Apprenticeship Levy.
Click Next then click Next.
Ensure the statutory values are correct then click Next.
Enter any CIS deductions suffered year to date then click Next.
The Apprenticeship Levy year to date and the annual Apprenticeship Levy Allowance values appear.
Click Next then click Finish to submit the EPS.

Next steps

If you use the nominal accounts link in Sage 50 Payroll to post salary journals to accounts, it doesn't include the Apprenticeship Levy value.

To reconcile your accounts, post a manual journal to record the Apprenticeship Levy. Use our Record a salary journal - UK only article to do this.

Steps to duplicate