Funding and The Levy

Are you ready for the new Apprenticeship Levy?

Let us help you get more back than you put in through a successful apprenticeship programme

In a bid to deliver three million apprenticeship starts by 2020, the government has introduced an Apprenticeship Levy on employers with an annual wage bill of more than £3 million to increase their contribution towards staff training, which will be topped up by 10%.

Employers with a wage bill of more than £3 million per year will pay a levy of 0.5% of their payroll from April 2017. The levy applies to all industries in the private and public sectors.

The levy will be collected through the employers Pay As You Earn (PAYE) and will be payable alongside incomes tax and national insurance. Employers can then access these payments to fund apprenticeship training.

Paybill is based on total employee earnings, it will not include benefits in kind.

How much will you have to pay?

The levy will be 0.5% of the annual paybill. Every employer is given a £15,000 allowance. This allowance is easiest explained with an example

Example 1: An employer with an annual paybill of £2,000,000
Levy sum: 0.5% x £2,000,000 = £10,000 = No levy to pay (the total amount of the levy sum is less than the £15,000 allowance)

Example 2: An employer with a paybill of £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000 (Minus levy allowance of £15,000) = £10,000 levy to pay annually

Please note, there will be a connected persons rule so employers who operate multiple payrolls will only be able to claim their £15,000 allowance once.

Employers will be able to access the funds they have paid through the apprenticeship levy to fund apprenticeship training for their business. Employers will be free to choose their training provider (e.g. their local college or other training provider) from those on the Register of Providers and discuss their needs and delivery. The funding is then paid directly to the provider from the government.

We can help you make the most of this investment by developing an apprenticeship scheme that will meet your business needs, drive your company forward, increase productivity and address your future skills gaps.

For more information on how you can make the most of the Apprenticeship programme or the new levy, please contact our experts