Process apprenticeship levy

Summary

How to process and submit the apprenticeship levy in Sage 50 Payroll.

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 the apprenticeship levy across multiple 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 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.

Resolution

Watch the video

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 18, check the Apprenticeship Levy value.

If there's a value in box 18, 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

▼ The calculation for the apprenticeship levy liability is

(Applicable Gross for NIC To Date x 0.5%) - Apprenticeship levy allowance To Date = Apprenticeship levy liability To Date.
TIP: An easy way to multiply by 0.5% is to multiply by the Gross for NIC by 0.005.

Apprenticeship Levy Liability To Date - Apprenticeship Levy liability already paid = Apprenticeship Levy liability This Period.

Sage 50 Payroll calculates the apprenticeship levy automatically and shows the relevant values in figure 18 on your P32 - Employer Payment Record
The apprenticeship levy always calculates on a cumulative basis, similar to PAYE
The apprenticeship levy calculation doesn't include all earnings. Find out about the Earnings included in the apprenticeship levy liability calculation
Check the applicable Gross for NIC by downloading the Payment Summary History Part 2 - By Date (Inc. Gross for NIC) from our Standard Report Library
Calculate the apprenticeship levy allowance to date. Divide your annual apprenticeship levy allowance by 12, then multiply this by the number of tax months you've already processed in the year
▼ View example

The default Apprenticeship Levy allowance is £15,000. To reconcile your Apprenticeship Levy in month 3, calculate the Apprenticeship Levy Allowance by doing: (15,000 / 12) x 3 = £3750

NOTE: If you split your apprenticeship levy across multiple companies, your annual allowance figure can be different. Read the Split the apprenticeship levy across multiple companies article to find out more.

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.