What is the Apprenticeship Levy?
In spring 2017 the way the government funds apprenticeships in England changed, to help fund employer apprenticeship schemes. The Levy will be introduced at a rate of 0.5% of an employers payroll.
All employers will receive an allowance of £15,000 to offset against payment of the levy, which effectively means that the apprenticeship levy will only be payable if your payroll is over £3 million each year.
How it will affect your business
- The Levy can be used to up skill existing staff or recruit & train new employees working towards an approved Apprenticeship Standard.
- The Levy will apply to all large organisations with an annual payroll of over £3million per annum, regardless of whether they already employ Apprentices or not.
- It will be payable by employers in the UK at the rate of 0.5% of the payroll cost through PAYE alongside Income Tax and National Insurance.
- Employers will not pay the first £15k of the Levy, which effectively means that the Levy will only be payable on payrolls in excess of £3 million per year.
- All employers will be supported by the government with regards to the Apprenticeship training.
- 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.
Levy Calculations
Example 1: an employer who would pay the levy
An employer with an annual pay bill of £5,000,000:
levy sum: 0.5% x £5,000,000 = £25,000
subtracting levy allowance: £25,000 – £15,000 = £10,000 annual levy payment
Example 2: an employer who would not have to pay the levy
An employer with an annual pay bill of £2,000,000:
levy sum: 0.5% x £2,000,000 = £10,000
subtracting levy allowance: £10,000 – £15,000 = £0 annual levy payment
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