Configure UK Apprenticeship Levy ER Deduction

The apprenticeship levy is an employer tax that you can configure the application to generate in UK legal entities. After you have configured this functionality, when you calculate payroll, the application automatically generates a system Apprentice Tax Levy memo deduction against individual employees for the purpose of accurate GL reporting.

This functionality is configured at the legal entity level, as well as at the payroll policy level. The application generates the Apprentice ER Tax Levy memo deduction using the Apply UK Taxes rule. You do not need to assign this deduction to the employee's payroll elections.

For example, when you calculate payroll for an employee whose legal entity has this functionality enabled, and who is assigned an applicable instance of the Apply UK Taxes Rule, the application generates the employee's regular salary, plus the Apprentice ER Tax Levy memo deduction.

This memo deduction is not included in the employee payslip, but it is included in other areas of the Payroll feature, such as in Payroll > Pay Run Management in the Employee Preview slide-out panel in the Preview or GL Preview tab:

In the Tax Month Management subtab of Payroll > Post Commit Management, when you select a legal entity and open the Tax Month Preview slide-out panel and click the Tax Month Reconciliation tab, the application displays the following fields related to the apprenticeship levy:

• Below the EPS Summary heading, the application displays the Apprenticeship Levy Due field.
• Below the EPS - User Info heading, the application displays the Apprenticeship Levy at 0.5% of NICable field.

Moreover, in the EPS Parameters tab of the Tax Month Preview slide-out panel, the application displays whether the customer is eligible to pay the apprenticeship levy, and also displays the annual allowance amount. These settings are read-only and you can only define them in Org Set-up.

Configuring the apprenticeship levy deduction involves the following process:

• Adding the functionality for a UK legal entity in the Employer National Insurance (ER NI) tax and setting the amount for EPS reporting.
• Adding the Apply UK Taxes Rule to the payroll policy.

To add the functionality to a UK legal entity:

1. Go to Org Set-up > Org Payroll Set-up > Organisation.
2. Select a UK legal entity from the list and click the Tax Authorities subtab.
3. In the Tax Name column, click ER NI.
4. In the Tax Setting section on the right side of the screen, select an existing setting or click Add to create one.
5. Select the Expected annual payroll exceeds Apprenticeship Levy Threshold checkbox.
6. In the Annual Apprenticeship Levy Allowance field, enter an allowance amount.
7. Click Save.

For information about adding the Apply UK Taxes Rule to a payroll policy, see Add or Configure Payroll Policies. This payroll policy rule calculates all taxes by default, and when you calculate payroll, the application runs this rule to generate the Apprentice ER Tax Levy memo deduction.