Other payroll tax

# United Kingdom Other Payroll Tax

The United Kingdom imposes several secondary payroll taxes beyond income tax and National Insurance contributions that employers must account for on employee compensation. These include Apprentice Levy, payroll-related pension contributions, and statutory deductions for court orders and student loan repayments. Apprentice Levy applies to employers with an annual payroll exceeding £3 million, charged at 0.5% of total payroll, though most training expenditure can offset this liability. Additionally, employers must manage deductions mandated by courts, such as Attachment of Earnings Orders, and facilitate student loan repayments through PAYE where applicable.

The primary governing legislation includes the Apprenticeships, Skills, Children and Learning Act 2009 for Apprentice Levy, the Income Tax (Earnings and Pensions) Act 2003 for statutory deductions, and the Student Loans Act 1998 for student loan recovery mechanisms. HM Revenue & Customs (HMRC) administers these obligations through the PAYE system.

Recent changes include adjustments to Apprentice Levy allowances and modifications to student loan repayment thresholds, which are reviewed annually. The current Apprentice Levy allowance stands at £15,000 per year for eligible employers.

Payroll teams must accurately identify which secondary taxes apply based on payroll size and employee circumstances, maintain detailed records of all deductions and levy calculations, and ensure timely reporting to HMRC. Failure to account for these obligations correctly can result in penalties and interest charges. Employers should review their payroll processes annually to confirm compliance with current thresholds and rates.