The Apprenticeship Levy

Apprenticeship Levy

What is the Apprenticeship Levy?


The Apprenticeship Levy was first announced at Summer Budget 2015, and at Autumn Statement 2015 it was announced it would come into affect in April 2017. It is a levy on UK employers to fund new apprenticeships, but will only be paid by UK companies that have an annual pay bill of more than £3 million.

The levy will be charged on their pay bill at a rate of 0.5%, it will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance.

Each employer will receive an allowance of £15,000 to offset against their levy payment, so in effect it will only be paid on a proportion of the pay bill (the amount that exceeds £3 million.) Companies that have more than one payroll will only be able to claim the allowance once.

Who will this new levy affect?
The companies that are affected must pay a levy, it will affect employers in all sectors, but less than 2% of companies will need to pay the levy. If your company is affected by these new requirements, then you need to ensure you are ready for this change in April 2017.

Companies will need to notify HM Revenue & Customs (HMRC) each month whether they are eligible to pay the levy. You will need to calculate the size of the levy you need to pay, and declare this to HMRC, you also need to include the levy in your usual PAYE payment. This declaration will be made via your Employer Payment Summary (EPS).

Once companies based in England have paid the levy, they will be able to access funds for provision of apprenticeships via a digital apprenticeship service account. By 2020, it is anticipated that all companies will be able to access this account, including those not subject to the levy.


How to Calculate Your Levy Charge

Although eligibility to pay the levy is based on the size of your annual pay bill, the levy will be paid on a monthly basis. This means you need to carry out the following calculations, you can also use HMRC’s basic tools to help you figure out the calculation:

For the first tax month of the year 

• Divide your Apprenticeship Levy allowance by 12 
• Subtract this figure from 0.5% of your monthly pay bill 

For subsequent months: 

• Calculate your total pay bill for the year to date 
• Calculate the total of your monthly levy allowances for the year to date 
• Subtract the total of these levy allowances from 0.5% of your total pay bill for the year to date 
• Subtract the amount of levy payments you have made for the year to date. 

Payroll Reporting Requirements

If your levy payment changes from month to month, this must be declared on the next EPS following the change.

If you make a mistake regarding payment of the levy, you will need to declare this on an additional EPS at the end of the tax year, and make your payment shortfall.

Records of all information you use to calculate your levy payment must be retained for at least three years following the end of the tax year to which they relate.


The introduction of the Apprenticeship Levy is just the latest in a series of changes that have made administering payroll more complex. If you currently administer your payroll in-house, then now might be the time to consider outsourcing it to an external payroll provider that specialises in this area. You can see the benefits about outsourcing payroll in this short article by following this link.

If you want any more help regarding the information discussed then please get in touch, you can find all our contact details at www.chrysalispayroll.co.uk.

The Spring Budget 2017

National Minimum and Living Wage Increase - April 2017

National Minimum wage and Living Wage is set to rise in April 2017

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.  This rates are set to rise in April 2017.  To qualify for these rates the below applies; 

You must be at least:

• school leaving age to get the National Minimum Wage
• aged 25 to get the National Living Wage - the minimum wage will still apply for workers aged 24 and under

New rates

Below are the new rates are for the National Living Wage and the National Minimum Wage. 

The benefits of using Chrysalis Payroll for Automatic Enrolment

The benefits of using Chrysalis Payroll for Automatic Enrolment

Introduction to Auto Enrolment

The workplace pension is the law and it states that every employer in the UK has duties they have to follow. Over the coming year, it is said that 750,000 small and micro employers are due to reach their staging date, with everyone having to comply by 2018.

Bearing this in mind I was astonished at a statistic I read the other day from an Auto Enrolment (AE) survey saying 1 in 10 SMEs plan to ignore these legislation changes, whilst a further 11% are still unaware what Auto-Enrolment is. 

Many employers will ask the question, 'Does Auto Enrolment affect me?'. If you are an employer in the UK and employ one or more employees, then the answer is yes and you should start preparing your business now. Auto Enrolment is a key part to the pensions reform, and as an employer you now have legal duties to enrol certain members of your workforce into a pension scheme which follows a certain set of criteria.

The date you are legally obligated to do this is known as your Staging Date which can by found on The Pensions Regulator Website.

Employers must enrol all eligible jobholders into an AE workplace pensions scheme. The employer must also contribute into the employee’s pension scheme, with contribution rates rising over the coming years.

To comply with Automatic Enrolment, employers need to complete a number of AE duties, including an assessment of all employees, communications, which involves sending the right letter, to the right employee, at the right time, opt-in’s and opt-outs,, calculating contributions and then sending all the relevant information over to their chosen pension provider.

IMPACT ON EMPLOYERS

Along with the new legal duties under the new legislation surrounding Auto Enrolment, you'll also have to think about the impact it will have on your business finances, we have listed some of these costs below;

• More admin work means longer hours for payroll staff
• Contribution costs to employees pension scheme
• Making your software compatible (normally a bolt on purchase)
• Charge from the pension provider for using a scheme

Chrysalis Payroll & Auto Enrolment

Employers can benefit greatly from using our honest and reliable AE solutions.  The first main difference you will realise about how we deal with Auto Enrolment as to any other bureau, is that we don’t charge for this service.  Our aim is to make things simple for you, and we want to help reduce the extra costs Auto Enrolment has placed. 

If you already have payroll ran by ourselves, we believe this shouldn’t be at an extra cost. Auto Enrolment is already going to cost you extra as an employer, so we don’t want to make it worse.

AE functionality should be included free of charge as part of your payroll package, many professionals have saw the introduction of Auto Enrolment as a chance to increase revenue due to the increased workload that takes place. 

Here at Chrysalis we pride ourselves at being experts in this field, our software is fully automated and ready for Auto Enrolment, our knowledge surrounding this new legislation allows us to be efficient and accurate in processing, allowing the freedom to offer you this service completely free of charge.

We offer a bespoke package that allows you to choose which parts of AE we take care of, from just the processing to start to end procedures, it is completely up to you.  As an employer, using Chrysalis Payroll to help you with your Auto Enrolment duties would give you a hassle free, simple alternative to Auto Enrolment. For efficient and successful AE compliance, Chrysalis Payroll offers huge advantages for employers.

How we can help with Auto Enrolment

Chrysalis Payroll offers a full flexible solution to Auto Enrolment. What’s more, there is NO additional charge for Auto Enrolment.  The services we offer are listed below; 

Auto Enrolment Services

Ongoing Service

If you are looking for a stress-free alternative to Auto-Enrolment our ongoing solutions 

are perfect.  From £1.50 per employee or free with our 12 month payroll contract we can 

take care of all of your ongoing Auto Enrolment duties including the following;

> Calculating pension deductions accurately.

> Creating and sending employee correspondence.

> Liaising with your pension provider.

> Upload of files to pension provider.

> Completion of your declaration of compliance. 

> Dedicated Auto Enrolment specialist.

> Centralised Auto Enrolment email and support line for employees.

The AE process with Chrysalis Payroll

Chrysalis can automate a lot of the administrative Auto Enrolment processes for you. Simply give us your staging date and which pension provider you wish to use, and the rest is easy.

Find out just how easy the entire process can be by speaking to one of your specialists today.

Switching payroll providers made easy.

If you have answered yes to the questions above then it may be time to begin looking for a new payroll provider. 

Here at Chrysalis we make switching providers simple.  It can take place at any point in the tax year, and is done at no extra cost to your business, and what’s better, it can be done in as little as four straightforward steps.

As a small business owner it is important that your payroll is kept in order. Not only is this a necessary part of keeping your business compliant, it will also help keep your staff happy if done correctly.  Many people believe transferring payroll providers is a complicated frustrating task, but it doesn’t have to be.  Our aim is to make things simple for you.  We have listed the four steps below on how easy it could be to switch to Chrysalis.

Step 1:  Getting started 

Contact one of our experts and we will work with you to deliver an uncomplicated solution that is the right fit for your business.

Step 2:  What we need from you 

To get started we can need as little as a back up or a few reports.  One of our experts will guide you through what we need, for example: personal data for employees such as names and address and their P11 data.  Our expert can even communicate with your current provider to gather this information for you.    We will then take the time to understand what is involved within your payroll and get to work straight away.

Step 3: Contact your provider 

Let your provider know you are leaving them.

Step 4: Let us do the rest 

We will then set everything up, which can take as little as a few days,  once complete we will be ready to process your payroll. 

This pain free solution to switching providers is quick and easy, and will save you both time and money.  Allowing you to focus on what's important for your business whilst we get payroll right.   To find out how you can switch to us today you can contact us at; 

Web:   www.chrysalispayrollandaccounts.co.uk

Email: info@chrysalispayroll.co.uk 

Call:    0191 673 0062

Merry Chirstmas from Chrysalis

As we are in full flow of the Christmas spirit as I sit here and sing out loud Christmas songs that I don’t even know all the words too, I would like to take this opportunity to wish you all a very Merry Christmas and a huge thank you for all your support this year.  Everyone at Chrysalis hopes it is a very enjoyable one, whatever you may be doing.

Rather than send out Christmas cards that get lost in the business rush of this time of year, or don’t get to you till the New Year, the Chrysalis payroll team have used the money normally spent on them and donated essentials to a local food bank in our area – Hospitality and Hope.

I will also take this time just to remind you that the office will be closed from Friday 23^rd December 2016 until Tuesday 3^rd January 2017.

Merry Christmas everyone and a Happy New Year .

The Chrysalis Team.

Autumn Statement

It’s the day after the Autumn Statement, and there have been quite a few changes that may affect your employees, and how payroll is ran.  We’ve compiled these changes into a summary which are detailed below;

Salary Sacrifice

The government is proposing to implement fundamental changes to salary sacrifice, as outlined in the consultation issued earlier this year. However, there are some important alterations to the previous proposals.

With effect from April 2017, the general rule will be that “the tax and employer NIC advantages” will be removed, but pensions, childcare, cycle to work and ultra-low emission cars will be exempt from the changes. Importantly, arrangements which are in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.

This proposal allows some breathing space for the large numbers who would otherwise have been adversely affected in relation to choices that have already been made, or will be made in the next few months, but employers will need to review flexible benefit arrangements to manage both reward strategies and compliance.

Please note - no mention was made in relation to employee NIC advantages being removed and in particular it was disappointing that no mention was made in relation to additional holiday salary sacrifice schemes as being exempt. I suspect the employee NIC advantage was an oversight and this too will be removed, unless an exempt scheme is involved.

Accordingly, we must for the meantime assume that any tax and employer NIC advantages of these schemes will disappear in due course, although if we become aware of any changes we will of course communicate these to you in another summary.

Termination Payments

Following the consultation this year, it is confirmed that employer NIC will apply to termination payments above £30,000 (in line with income tax). In addition, pay in lieu of notice will be subject to tax generally, amending the current situation where it depends on the specific contractual terms. It appears the pay in lieu change will, however, only affect “basic” pay, rather than the wider changes affecting all earnings which had been proposed, and would have been complex to administer.

These changes will be implemented from April 2018 and will no doubt need to be taken into consideration when structuring some of the larger termination payments.

National Minimum Wage (NWM)/National Living Wage (NWL)

The government confirmed that NLW rates will increase in April 2017, however they also confirmed that NMW rates will also increase at this point in time too. It wasn’t clear whether NMW rates will increase further in October 2017, or whether any changes will now take place in April of each year.

In addition, the government had outlined plans to invest a further £4.3m in their NMW Enforcement teams, allowing them to take a more proactive approach in raising awareness and targeting sectors where failures are deemed to occur.

PAYE Settlement Agreements

The government has said it will legislate to simplify the process of applying for and agreeing PSAs, to come into effect from April 2018, following the consultation this year. Further details are awaited.

Employee Benefits and Expenses

Several changes are being proposed and consulted on in relation to benefits and expenses:

• From April 2017, the rules relating to “making good” benefits will be simplified and made more consistent, in line with the consultation earlier this year. Payment will need to be made by the employee by 6 July to reduce the taxable value of the benefit
• Legislation on assets made available for private use will be clarified with effect from April 2017, so that employees are only taxed for the period the asset is available
• The government will consider how benefits in kind are valued for tax purposes, publishing a consultation on employer-provided living accommodation and a call for evidence on the valuation of all other benefits in kind at Budget 2017
• There will be a call for evidence at Budget 2017 on the use of the income tax relief for employees’ business expenses, including those that are not reimbursed by their employer – previously HMRC was considering changing the rules so that there would be no tax relief unless the employer reimbursed the expense.

Off-payroll working

As expected, new rules for the public sector will apply from April 2017, which will give the engager (or agency) responsibility to apply PAYE where a personal service company is engaged and “IR35” deemed employment rules would apply. The 5% tax-free allowance which normally applies for IR35 will not apply.

It remains to be seen whether these changes will be applied to the private sector in due course. The Chancellor in his speech stated “…the OBR has today highlighted the growing cost to the Exchequer of incorporation. So, the government will consider how we can ensure that the taxation of different ways of working is fair between different individuals, and sustains the tax-base as the economy undergoes rapid change. We will consult in due course on any proposed changes.”

Tax/NIC rates

Some adjustments are proposed to tax/NIC rates and thresholds. Details can be found here: https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18#national-insurance-contributions-nic

If you have any questions on what you have just read, or how it might affect you, then don't hesitate to contact us.  You can email info@chrysalispayroll.co.uk or call 0191 673 0062.