Tweaks to Apprentice Levy will benefit SMEs – CIoT » SMEInsider

Tweaks to Apprentice Levy will benefit SMEs – CIoT

The UK’s SMEs don’t always welcome changes to the tax code, but news today may be the exception.

The UK’s leading tax institute has welcomed an amendment in the way the Apprentice Levy is to be managed.

The Chartered Institute of Taxation (CIoT), the body charged with promoting education in taxation with a key aim of achieving a more efficient and less complex tax system for all, says that the amended rules will now allow a group of connected employers the flexibility to decide the proportion of the £15,000 allowance to which each employing company will be entitled.

Under the original draft form of the Levy, if a group of companies were ‘connected’ then only one employing company in the group could claim the £15,000 allowance. But it has now accepted that this could lead to a significantly higher number of employers subject to the levy than it had originally intended, and made the amendment to avoid that.


A welcome change

Colin Ben-Nathan, chairman of the CIOT’s Employment Taxes Sub-Committee, said that “Allowing connected companies to split the £15,000 levy allowance between them will mean they can use the allowance in full, so that provided their combined pay bill does not exceed £3 million they will not have to pay any levy at all.  This is very welcome and indeed consistent with the Government’s basic message that the levy should only impact those with pay bills of over £3 million.”

The CIOT points out that it is important to understand what connected’ means in this context. A company is connected with another company if one company controls another or the same person or persons has control of both companies and in certain other defined circumstances.