Many small businesses will benefit from proposed amendments to Finance Bill 2016 which will enable connected employers to share the £15,000 Apprenticeship Levy allowance which will be introduced from April 2017.

The Apprenticeship levy will be charged at 0.5% of employers’ pay bills.  This is subject to an allowance of £15,000 which was intended to ensure that only the largest employers, with pay bills in excess of £3 million, would be affected by the charge.

Originally the proposals were that where companies were connected with each other, only one could claim the allowance; if there was more than one employing company then each additional employer would be subject to the charge regardless of its size.  As a result more companies would be affected by the charge than was intended.

HMRC have announced that the Finance Bill will be amended so that a group of connected companies can share the £15,000 allowance between them in any proportion that they choose.  The proportion of the allowance that each company will receive is decided at the beginning of each tax year and cannot then be changed until the next tax year.

Companies are connected if one of them has control of the other or if both are under the control of the same person or persons.  A person or persons have control if they are entitled to the greater part of a company’s votes, income or capital on a winding up.