Apprenticeship Levy

User Guide

Payroll Great Britain

Version 1.0

December 2016
 SAP (UK) Ltd. Payroll GB: Apprenticeship Levy V1

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Table of Contents
1. Apprenticeship Levy......................................................................................................................... 3
1.1 Apprenticeship Levy at a glance ............................................................................................... 3
2 Configuration in SAP ........................................................................................................................ 5
2.1 New IMG Nodes ....................................................................................................................... 5
2.2 Activating the solution - GBCHG: Node 17 ................................................................................ 5
2.3 Levy Allowance ........................................................................................................................ 6
3 Apprenticeship Levy and RTI Control Report .................................................................................... 9
4 Apprenticeship Levy and Employer Payment Submission ............................................................... 10
5 Data Take On ................................................................................................................................. 13
6 FI Posting ....................................................................................................................................... 13
7 Solution Delivery............................................................................................................................ 13

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1. Apprenticeship Levy

The Apprenticeship Levy was announced in the Summer Budget 2015, and in the Autumn
Statement 2015 it was announced that it would come into effect in April 2017.
The Apprenticeship Levy will be a levy on employers operating in the UK to fund new
apprenticeships. The levy will be charged at a rate of 0.5% of an employers pay bill.
Employers will receive an annual allowance of 15,000 to offset against their levy payment
and this means that employers not subject to the rules around connection will only pay the
levy if their pay bill exceeds 3 million in a given year.

1.1 Apprenticeship Levy at a glance

Apprentice Levy

From 6 April 2017, Employers with annual pay bill over 3 million will pay the levy.

Employers pay Bill

In SAP the Employers annual pay bill is the total of NI pay YTD of all the EEs
within the tax reference.

Levy Allowance

The levy allowance of 15,000 will apply in each tax year. Employers can use the
allowance to offset against their levy liability, subject to the connected companies
and charities rules.

The levy liability will be calculated monthly with the operation of the annual
allowance being offset on a cumulative pro-rata basis.

Levy Percentage and calculation

The levy will be charged at a rate of 0.5% of an employers pay bill and the annual
allowance of 15,000 will be offset against this.

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Apprentice Levy reporting

The Levy Due YTD and the Levy Allowance Allocated YTD are reported to HMRC
wherever applicable through the Employer Payment Submission (EPS).

Example

Regular pay bill of 300000 each month (3.6m for the tax year)

Month 1

300000 x 0.5% = 1500 levy

Cumulative levy allowance = 1250

Levy payable month 1 1500 - 1250 = 250

Month 2

600000 (300000 + 300000) x 0.5% = 3000

Cumulative levy allowance 2500

Levy payable to month 2 is 3000 - 2500 = 500

Levy paid in month 2 = levy payable to month 2 levy paid to month 1

= 500 250 = 250

And so on until

Month 12

3.6 million (300000 x 12) x 0.5% = 18000

Cumulative levy allowance 15000

Levy payable to month 12 is 3000

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Levy paid in month 12 = levy payable to month 12 levy paid to month 11

= 3000 2750 = 250

This means that the organization pays 250 each month in levy which totals
3000 over the year.

2 Configuration in SAP
2.1 New IMG Nodes
A node Apprenticeship Levy has been introduced under Payroll Great Britain.

2.2 Activating the solution - GBCHG: Node 17

The apprenticeship levy solution can be activated by setting the return value of
feature GBCHG (Node 17) to the date from which you want to activate the solution.
The date must be in the format 06.04.YYYY.
The decision to activate the solution is at tax reference level, therefore the solution
must be explicitly activated for all payroll areas within the tax reference.

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The return value for the Apprenticeship Levy calculation solution is pre-delivered
as 31.12.9999 (inactive).

2.3 Levy Allowance

Levy Allowance is assigned to a company.
An employer can choose to apply the Levy allowance for a single tax
reference or distribute the Levy allowance across different tax references in
case of more than one legal entity.
The levy allowance distribution must be agreed with HMRC and cannot be
changed mid tax year.

View V_T5G_APP01 should be used to distribute the Levy Allowance.

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Different tax references sharing the Levy Allowance should all have the same
Employer group. Please see the table entries below.

In the snapshot above, Employer Group 3 has 2 tax references that have the
Levy allowance distributed between them.

2.3.1. Validations - V_T5G_APP01 entries

Validations have been introduced in the view V_T5G_APP01 to ensure that
the data maintained is legally compliant. Following two validations have been
introduced.

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a. When the Levy allowance distributed to the tax references within the
same Employer Grouping is greater than 15,000 then the following error
message is displayed.

b. When more than one entry is made for the same tax reference in different
Employer Grouping in the same time frame, the following error message
is displayed.

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3 Apprenticeship Levy and RTI Control Report

The RTI Control Report (RPLRTIGH) has been enhanced to perform the Apprenticeship
Levy calculation.

The SXP option on the selection screen of the control report has been re-named as EPS
as the control report is determining the SXP and Apprenticeship Levy values for the EPS
effective 06.04.2017.

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The output of the EPS option looks as follows.

The Apprenticeship Levy YTDs Employee Specific tab, has the following information for
each employee in the tax reference including the leavers.
Tax Month
Tax District Number
Tax District Indicator
Tax Year
Pernr
NI Number
First Name
Last Name
Gender
Date of Birth
NI-able Pay YTD

The NI-able pay YTD value is derived from table RTINI and it includes the value of
previous employment in the current tax year in case of rehires.

4 Apprenticeship Levy and Employer Payment Submission

The Employer Payment Submission EPS report has the following new fields added.
Apprentice Levy YTD
Apprentice Levy Allowance YTD

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NI-able Pay YTD

The EPS internally calls the RTI Control report to determine the Apprenticeship Levy values.
The value of the Apprentice Levy YTD and the Levy Allowance YTD are reported to HMRC
every tax month, when applicable via the EPS reporting.

The Display SXP and Apprenticeship Levy button when clicked auto populate the SXP,
NI-able pay YTD and Apprenticeship Levy values for the tax reference.

The report provides the flexibility overwrite any of the values derived by the system and
then submitted to HMRC

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The system will display a warning when the Apprenticeship Levy relevant values are
overwritten as shown below.

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5 Data Take On
The legacy systems Apprenticeship Levy YTD can be maintained in the view
V_T5G_DTOAL. This facility is to be used for Data Take On scenarios.

6 FI Posting

The amount of Apprentice Levy is calculated on the full pay bill for a tax reference as per
the instructions from HMRC. This can only be done when all payrolls for that Tax reference
have been calculated and the live run of the FPS submitted to HMRC, so this has to be a
post payroll process. The Control Report will pick up the values for the NIable pay
YTD, calculate the 0.5% levy value, then apply the levy allowance YTD for the tax
reference and the resulting Levy Due is reported. The same piece of functionality is used to
auto fill the Levy YTD values in the EPS and when this is processed in Live the YTD Levy
value is recorded in PCL4. It is not possible to calculate the Levy during the payroll
processing as this would imply calculating the levy per employee, which is incorrect.
Therefore it is not possible to generate a wagetype for each employee, so automated cost
distribution and posting of the values to Finance cannot be done.

As the Control report will calculate the value of the Apprentice Levy YTD and also show
this period value. A manual journal will be needed to post this value to Finance with any
apportioning to different cost centres to meet your business requirements.

7 Solution Delivery
The Apprenticeship Levy solution has been delivered in the Christmas HRSP 2016.
Following are the SP numbers for various releases.
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Release SP
6.08 36
6.04 A8
6.00 E2

The note that delivers this change is 2401318.

The changes can be implemented via SP only. There are no correction instructions
attached with the note.

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