The Apprenticeship Levy

What is the Apprenticeship Levy and who does it apply to?

The government have devised a plan to increase the quality and quantity of Apprenticeships, as part of this they have introduced the Apprenticeship Levy.

The Apprenticeship Levy is a tax that applies to businesses that have an annual payroll of over £3 million. As of April 2017, all eligible businesses will be legally required to pay the Apprenticeship Levy.

How will the Apprenticeship Levy be paid?

Levy payments will be paid monthly through a Pay as You Earn system and collected by HM Revenue and Customs (HMRC). Businesses will be able to access their funds via a new online Digital Apprenticeship Service (DAS) account.

Each business will be required to pay a different amount as it is dependent on each businesses individual payroll bill. The amount paid is worked out as 0.5% of the annual payroll bill minus an allowance of £15,000.

Business A – Annual Payroll bill of £10 million

0.5% of £10 million is £50,000.

£50,000 minus £15,000 is £35,000.

Business A is required to pay £35,000 into their DAS account in monthly instalments.

Business B- Annual Payroll bill of £3.7 million

0.5% of £3.7 million is £18,500

£18,500 minus £15,000 is £3,500.

Business B is required to pay £3,500 into their DAS account in monthly instalments.

What happens if you use all the Apprenticeship Levy funds and want more apprentices?

Businesses will then use the Co-investment Model which is followed by Non-Levy employers.

Employers contribute 10% of the cost of the Apprenticeship training directly to the training provider and the government will fund the other 90%.

*Please note that if your business has 49 employees or less you will not have to make any contribution to the Apprentice’s training.

If you have any questions or queries regarding the Apprenticeship Levy or would just like some more information, please do not hesitate to call us on 01423 740006.