Have you calculated your Levy?

Key points:

  • Funds will be accessed through a new digital Apprenticeship service account and will appear in your account monthly, which will be available for registration in January 2017. The first funds collected in April 2017 and available to spend in May 2017.

  • Funds will expire 18 months after they enter your digital account if you don't spend them on Apprenticeship training.

  • Government will work with the devolved administrations to make the levy work for employers that have operations across the UK, and will continue to publish more details.

  • Government will apply a 10% top-up to the funds you have for spending on Apprenticeship training in England.

  • Once you have agreed a price with a training provider, all payments to the provider will be made monthly for the first year of the Levy.

  • Employers can use the digital Apprenticeship service whether they pay the levy or not to help them choose training providers, assessment organisations and post vacancies.

Highlights from the update

So what does all of that really mean? Read our summary of the key updates from the new guidance for employers:

How will the levy be paid?

The levy will be paid by employers in any sector with a pay bill of more than 3 million per year, and will be charged at 0.5%. The levy will be paid to HMRC through PAYE. You will calculate, report and pay your levy to HMRC, through the PAYE process alongside tax and NICs. If you have calculated that you will pay the Apprenticeship levy, you will need to declare this and include it in your usual PAYE payment to HMRC.

What counts as the pay bill?

The pay bill will be calculated based on the total amount of earnings subject to Class 1 secondary NICs. Earnings include any remuneration or profit coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on.

How do I calculate how much I need to pay?

You will pay the levy on your entire pay bill at a rate of 0.5%. However, you will have a levy allowance to offset against this. The levy allowance is worth 15,000 for each tax year. This means the levy is only payable on pay bills over 3 million (because 0.5% x 3 million = 15,000).

Non-Levy Organisations

For organisations where the Levy doesn't apply, will pay 5% towards the cost of the training and assessing your apprentice. You will be required to pay the training organisation directly and agree a payment schedule.

The government will pay the remaining 95% directly to the training organisation and upto the maximum funding band for the particular course.

You may be eligible for extra funding, this will depend on both your and your apprentices circumstances.

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