ALM12450 | Specific sectors and employees: government departments and their agencies

Government departments with an annual pay bill of over £3 million will have a liability to pay the levy.

Whether or not a government agency (for example HM Prison Service, Legal Aid Agency), or an arm's length body, has a liability to pay the levy and therefore its own allowance will depend on whether it is an employer in its own right distinct from that of its parent department (that is the Ministry of Justice in the case of the agencies named above).

It will be an employer for the purposes of the levy if it has a liability to pay Class 1 secondary National Insurance Contributions (NIC) on the earnings of its employees. Where the arm's length body is not an employer in its own right, the parent department will generally include the earnings of the body in its pay bill for the purposes of calculating its levy liability.

For more information on the annual allowance for the Apprenticeship Levy and connected party rules for Public Bodies, please refer to ALM12050.