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Are you entitled to apprenticeship tax credits? - The PAYE People

September 7, 2021by The PAYE People

Apprenticeship tax credit exists in the UK and there is a framework in place for them. The only thing that differs between the UK and other countries is the type of apprenticeship, wage and qualifications you need for them. For instance, an apprenticeship should happen in person and this shouldn’t happen remotely. In addition, the apprenticeship should be for a minimum of 12 months and must be full-time.

People wonder whether they qualify to receive apprenticeship tax credits. These credits are designed in a way that encourages businesses to hire apprentices. And to qualify for them, an apprentice should get a wage of £4.30 or more per hour. Though they may not be mandatory for the employer, they are a good way to show that the business is doing the right thing to support apprenticeships. Plus there are many other additional benefits a business gets from hiring apprentices like filling the work gaps and improving productivity.

An apprentice working on his laptop being taught by a tutor, explaining do apprenticeships pay apprenticeship tax.

Understanding apprenticeship and tax credits

An apprenticeship tax credit is the funding a person gets from the government as they take work-related training programmes. This applies to people who are 16 and over. These programmes are meant to equip students with skills they’ll need when they get various job roles or employment in the future.

Apprenticeships come in all education levels from intermediate to advanced stages as long as they last at least 12 months. You can choose from a wide range of subjects ranging from:

  • business administration
  • customer service
  • finance
  • and even fashion

While apprenticeships are popular for young people, they are open for all ages as long as you are eligible. Depending on the sector you choose, your age, skills, an apprenticeship can take anywhere between one year to five years to complete.

Individual apprentices follow approved study programmes specially designed for the job they are training for. The employer determines the training structure. Here’s what you should expect from the workplace:

  • A detailed training plan
  • Progress reviews on a regular basis
  • Mentorship and support throughout the period as an apprentice
  • Practical training at the job
  • Assessments and tests

A culinary apprentice decorating a plate with a stunning dish.

How to get apprenticeship tax credits in the UK

As mentioned earlier, the UK apprenticeship initiative was designed to ensure every young person in the country has access to an apprenticeship opportunity. By signing up for the initiative, the government offers tax credits for apprenticeships in Scotland, Wales and Northern Ireland. The apprenticeship tax credits are open to apprentices who work for businesses of all sizes, including charities and SMEs.

Employers sign up to offer apprenticeships then the interested apprentices apply to join. Employers get incentives to carry out apprenticeship programmes. The apprentice gets apprenticeship tax credits. If you are an apprentice about to claim tax credits, read the following information to be sure you qualify for them.

Are there tax credits for an apprentice?

Apprentices get tax credits if they meet particular qualifying conditions. According to the HMRC, you can qualify for tax credits if:

  • You have signed a contract with your employer for your apprenticeship
  • You are attending an apprenticeship that you get paid (earnings). And what you get is subject to National Insurance contribution and income tax

That means that the time you spend working is not classified as remunerative work if whatever you receive after working is not taxable income. Examples include reimbursement of expenses, a sports award, training allowance, or a gift.

Five apprentices taking a celebratory photograph for completing their apprenticeship.

What income is considered?

In order for you to qualify for tax credits, you should be working and earning from what you do. This could be taxable income from state benefits, student income, self-employment income, pension income, income from property, foreign income, and savings.

Can I get tax credits if I’m a student?

Students get tax credits if they qualify according to the apprenticeship tax credit rules. To claim a tax credit, you must work and get paid as you study. When you spend time that’s supposed to be used for studies, that won’t be considered remunerative work.

With an exception of those with children and those with disabilities, you have to be 25 or over and work at least 30 hours per week to be entitled to a tax credit. Those with disabilities qualify for a disability tax credit. Those in this category can claim their tax credit from the age of 16 for working 16 hours every week.

Likewise, single parents or guardians with children can also claim tax credit from the same age. That is 16 for working at least 16 hours per week. For those with partners, the hours are raised to 24 hours but either of you can clock 16 hours minimum per week. You can work 16 hours per week and still claim your tax credit.

If you are wondering whether you qualify for tax credits when you study part-time, then this shouldn’t be a concern. Whether you do studies full time or part-time, you can still get tax credits as long as you meet the qualifications we mention above.

A bakery apprenticeship with a baker being shown their completed batch of bread.

What if my studies require me to go abroad?

Unfortunately, qualifying for tax credits requires you to be available in the UK. The rules have exceptions for those who go away temporarily. Temporary here means you are not expecting to be away for more than 52 weeks. During your temporary absence, for the first 8 weeks, the rules assume you to be present in the country. This can move up to 12 weeks if you can prove that you are out of the UK because of a health problem or you lost someone.

If you take longer than this period, your tax credit claims cease to exist. That’s because the law considers you not to be in the UK. On your return, you will need to apply for support afresh. Therefore, if you are leaving to go abroad for some reason. Say education or otherwise, you need to inform the HMRC to enable the appropriate adjustments.

A builder apprenticeship with an apprentice being shown plans complete a building.

Summary on apprenticeship tax credit

It’s no secret that unemployment is rising in the UK. And if you’re one of the many out of work, or not happy with your current career, you might want to consider the idea of apprenticeship positions. To be efficient, the design of apprenticeships are for you to be successful. This means that the goals of the business will often be in line to fit your goals. You can learn skills that are useful to the company but will also prepare you to head into the marketplace after your apprenticeship is complete.

When you join an apprenticeship, ensure you follow the set guidelines for your claims for an apprenticeship tax credit to go through.

The PAYE People

The PAYE People help PAYE workers all over the UK claim money they’re owed in tax rebates.
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