ALM13050 - Mergers, acquisitions and joint ventures: introduction

Sections 101 and 102 of the Finance Act 2016

Connection is determined at the start of the tax year (see ALM11100 for the connection rules). Therefore there can be no change to the allocation of the levy allowance mid-year. If an employer is part of a group of connected companies or connected charities, and the structure of their group changes mid-year, they must continue to apply the levy allowance which they were allocated at the start of the tax year. At the start of the new tax year they can then determine how the levy allowance will be allocated across their group for that tax year.

Individual employers who become connected to another company mid-way through the tax year by virtue of the connected rules, will both continue to have the levy allowance which they had at the start of the tax year for the remainder of the tax year. At the start of the next tax year they can then determine how the levy allowance will be allocated between them for the new tax year.

If an employer starts-up mid-way through the tax year, or stops being an employer mid-way through the tax year, they will still have the full annual levy allowance of £15,000 for that tax year.