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Apprenticeship levy and apprenticeship funding
Larger employers (or connected employers treated as large) will be liable to pay the apprenticeship levy from April 2017. The levy is set at a rate of 0.5% of an employer’s pay bill, which is broadly total employee earnings excluding benefits in kind, and will be paid along with other PAYE deductions. Each employer receives an annual allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any pay bill in excess of £3 million in a year.
Employers only need to report on the levy where they have a pay bill of £3 million in the current tax year or consider that the pay bill will be over £3 million during the 2017/18 tax year.
The levy will be used to provide funding for apprenticeships and there will be changes to the funding for apprenticeship training for all employers as a consequence. Each country in the UK has its own apprenticeship authority and each is making changes to its scheme.
Different forms of remuneration
The government is consulting on the following:
Taxation of benefits in kind
The government will publish a call for evidence on exemptions and valuation methodology for the income tax and employer NICs treatment of benefits in kind, in order to better understand whether their use in the tax system can be made fairer and more consistent.
Accommodation benefits
The government will publish a consultation with proposals to bring the tax treatment of employer-provided accommodation and board and lodgings up to date. This will include proposals for when accommodation should be exempt from tax and to support taxpayers during any transition.
Employee expenses
The government will publish a call for evidence to better understand the use of the income tax relief for employees’ expenses, including those that are not reimbursed by their employer.
Comment
Employers can choose to remunerate their employees in a range of different ways but, in the view of the government, the tax system may treat these forms
of remuneration inconsistently. The government is therefore considering how the tax system ‘could be made fairer and more coherent’.
Salary sacrifice
Legislation will limit the income tax and employer NICs advantages where:
• benefits in kind are offered through salary sacrifice or
• the employee can choose between cash allowances and benefits in kind.
10 Employment Taxes
Budget Summary 2017