The Apprenticeship Levy is a government initiative that was originally announced in 2015, where the government proposed to apply the levy to public and private employers across the UK.
The Apprenticeship Levy is being introduced on 6th April 2017 as part of the government’s plan to help fund 3 million new Apprenticeships by 2020, as a major commitment to increasing both the quality and the quantity of Apprenticeships in England by putting the control in the hands of Employers.
The levy will not affect funding for apprentices who started an apprenticeship programme before 1 May 2017 – training will continue for these apprentices under the terms that were in place at the time the apprenticeship started. For more information please click here.
If your business has an annual payroll of £3 million or less, you will not pay the levy, and the government will continue to support Apprenticeships in your business.
How is the Apprenticeship Levy calculated?
The Apprenticeship Levy is charged at 0.5% of an employer’s annual wage pay bill, and will be paid through PAYE alongside Income Tax and National Insurance. Each Employer will receive an allowance of £15,000 to offset against their levy payment – the levy payment will only be paid by Employers who have an annual payroll of more than £3 million regardless of whether they employ Apprentices or not.
Public sector organisations will also pay the levy if their payroll meets the above criteria and in addition, 2.32% of their workforce must be Apprentices.
250 employees, each with a gross salary of £20,000
Wage bill: 250 x £20,000 – £5,000,000
Levy Sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual Levy Payment
How do I allocate Levy contributions?
Employers in England who are affected will be able to allocate levy contributions using the digital account service to train their Apprentices. The levy will be paid by all UK employers although in Wales, Scotland and Northern Ireland the funding generated is delivered to the nation and England has no control what it is spent on.
The government will apply a 10% top-up to monthly funds entering levy paying employers digital accounts, for Apprenticeship training in England, from April 2017. All funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value.
What happens if I don’t spend Levy funds?
If employers do not spend their levy funds after 24 months, they will be ‘lost’, and made more widely available to other companies engaged with Apprenticeships.
For more information:
If you would like to speak to someone about these changes or if your payroll exceeds £3 million per annum, please contact – 0208 532 3400 or email email@example.com