Are you aware of the New Apprenticeship Levy?

Posted On: 5th April 2017

What is the Apprenticeship Levy?

On 6 April 2017 the Apprenticeship Levy comes into effect and it is important that you are aware what this means to your business.

In Summary: 

  • All employers with a payroll of £3m or above will be taxed 0.5% on their payroll from 6th April 2017.
  • This levy threshold applies to an annual payroll bill for any employee you pay via PAYE. Therefore a business employing members of staff will be liable to pay the levy if they reach the threshold on both their permanent staff as well as any other contingent labour on your payroll.
  • Companies with a payroll below £3m will not pay the levy.
  • The levy can only be spent on accredited apprenticeship programmes.
  • What you pay will automatically be calculated via HMRC’s Real Time Information and calculated on all employee earnings subject to Class 1 National Insurance Contributions
  • The levy amount will be transferred to a digital account specifically for your company/ organisation and made available from 1 May 2017 to spend on apprenticeships in your business.
  • You will have up to 24 months to spend the amount accumulated in your digital account.

What will employers get back from the levy?

Employers in England will be able to reclaim their Apprenticeship Levy contributions as digital vouchers to use to pay for training apprentices. This voucher system will not apply in Scotland, Wales and Northern Ireland.

What can levy funds pay for?

Funds in the digital account can pay for apprenticeship training and assessment (with an approved provider and assessment organisation such as Absolute Works) up to its funding band maximum. These funds cannot pay for apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships, or the costs of setting up an apprenticeship programme.

How will companies outside the apprenticeship levy fund apprenticeships?

Employers who do not pay the Apprenticeship Levy will not need to use the digital voucher to pay for apprenticeship training and assessment until at least 2018. They will need to choose a training provider from the registered list such as Absolute Works, agree the cost of the training and adhere to the funding caps for different qualifications, in the same way as larger firms that pay the Apprenticeship Levy.

Are you looking to take on new enthusiastic team members or would you like your existing staff to develop their skills? Then Apprenticeships may provide you with the training solution you are looking for.

Call Absolute Works today on 01926 748040 or email Rachel Menary, our Apprenticeship Co-ordinator, to find out more about how an Apprentice could benefit your business and learn more about the options and funding available to you as an employer.