Apprenticeship Levy

Are you a UK employer with an annual pay bill over £3m?

Announced by the Chancellor in the 2016 Autumn Statement, the Apprenticeship Levy is expected to supplement Government Apprenticeship funding by raising £3bn annually.

The Levy will require you to make an investment into apprenticeships, from which you can benefit by training existing employees or new recruits and by bringing high level professional and technical skills to your business.

It will be calculated based on total employee earnings, not including other payments such as benefit in kind. Every employer will receive a £15,000 allowance to offset the costs, which means that only 2% of employers will pay.

Even with just a small percentage of employers contributing, the Government anticipates raising £3bn annually through the Levy.

Employers will be allocated funding via a digital voucher system, which can be used to purchase training from providers, giving them more choice and control over the training offered to apprentices. Ensuring that you make the right choice, and are informed in making that choice, will be important.

The Facts:

  • If you are a UK employer with a payroll bill that exceeds £3m, you must pay the Apprenticeship Levy.
  • The Levy applies to England only and comes into effect in April 2017.
  • The Levy rate is 0.5% of your total annual pay bill (gross) and is paid through PAYE.
  • Your pay bill will be based on the total amount of earnings subject to Class 1 secondary National Insurance Contributions (NICs).
  • You will be required to contribute regardless of whether you train apprentices or not.
  • You will have a Levy allowance of £15,000 per year to offset against the Levy you pay.
  • You will receive a 10% monthly top-up from the government to any funds that you already have for spending on apprenticeship training.
  • Once you have paid the Levy to HMRC, you will be able to access funding for apprenticeships through the new Digital Apprenticeship Service. Any money reclaimed will be in the form of an e-voucher where you’ll be able to buy apprenticeship training from approved providers.
  • Levy funding in an employer’s digital apprenticeship account will expire in 24 months.
  • Non-levy paying employers won’t use the Digital Apprenticeship Service to pay for training until 2018.
  • Non-levy paying employers will make a 5% contribution to the cost of training and the government will pay the rest (95%).
  • Every apprenticeship standard and framework will be placed in 1 of 15 funding bands, which will outline the maximum amount that can be used towards training and assessment costs over the length of each apprenticeship.
  • There are extra employer incentive payments available for employing 16-18 year olds.

We are here to help!

If you need any help, support or simply some clarification, please do not hesitate to get in touch with the LEAD team. We hold regular Levy Breakfast Seminars, have supporting literature and funding experts who can help explain.

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