What is the Apprenticeship Levy?
The Levy has been put in place from April 2017 to collect a TAX from large UK businesses with a turnover of £3 million or more, to generate funds that will support and enhance the quality and amount of apprenticeships available. It aims to use this money to pay for 3 million new apprenticeships by 2020.
When and how is it paid?
The relevant large UK businesses, subject to the Levy, will be required to start paying from April 2017. It will be paid on a monthly basis through the PAYE system the same way you pay Income Tax or NI contributions.
How is the levy calculated?
The rate is 0.5% of the employer’s paybill, however, all firms receive an offset allowance of £15,000. The £15,000 allowance is divided into 12 monthly allowances of £1,250. If the 0.5% of the monthly paybill is more than £1,250, the employer pays the difference as the Apprenticeship Levy.
How to report the amount that needs paying?
This is documented through your monthly EPS (Employer Payment Summary) reports.
Information for schools:
For most of the schools the governing body is the employer, and each governing body will be entitled to a £15,000 allowance.
All employers of smaller UK businesses with a turnover less than £3 million are excluded from the new Apprenticeship Levy. In case this limit is exceeded, annualised calculation will be triggered for the Levy and will continue for the rest of the tax year.
Is there certain criteria I should meet?
You are legally obliged to register for VAT if your VAT taxable turnover exceeds the threshold of £83,000, in any 12 month period (VAT taxable turnover is the total value of everything you sell, that isn’t exempt from VAT). Also, you must register immediately if you expect to exceed the amount of £83,000 in the next 30 days alone. In case you only sell goods or services that are exempt from VAT, but you buy goods for use in your business for over £83,000 from EU VAT- registered suppliers, you have to register as well.
Nonetheless, even if you haven’t exceeded the threshold for compulsory registration, you can still register voluntarily, if you believe that doing so might benefit you.
What are the benefits of being VAT registered?
Firstly, if you are VAT registered, you can reclaim the VAT that other businesses charge you; the input tax. In similar fashion, the amount of VAT that you collect from your customers is called an output tax.
In total: the amount you owe to HMRC= output tax- input tax. As long your input VAT exceeds the output, you will be able to reclaim the difference from HMRC.
Also, you might wish to register for VAT in case you want your business to appear larger than it actually is. Assuming that you are trying to present an image of being a big and well established company, you most likely wouldn’t want your clients knowing that your turnover doesn’t exceed £83,000.
How do I become VAT registered?
Businesses are able to register either online or by post. There are certain instances in which you aren’t able to register online, such as:
- Applying for registration exception
- Joining the Agricultural Flat Rate Scheme
- If you import goods from EU countries
- If you are an EU business selling to the UK
If you are eligible to register online, you can follow the Solemn Lane’s guide:
- Go to https://www.gov.uk/log-in-register-hmrc-online-services
- If you already have an account, sign in.
Otherwise, click “problems signing in” and choose “create a new account”. Follow the instructions on screen to create your new account (don’t forget to write down the Government Gateway ID)
- You should see a menu option that says “Register for taxes”. Select this option and follow the instructions on screen to complete your VAT registration application.
- You should receive your VAT registration certificate within 14 working days.
Even though you are able to register yourself, many businesses choose to appoint an accountant to do so. Afterwards, the accountant can deal with HMRC on their behalf and submit their VAT returns. Solemn Lane will be happy to help you to take care of all your VAT needs, leaving you free to run your business. If you want to get your personalized quote, click here.
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