The Apprenticeship levy
The way Apprenticeships are funded changed when the UK Apprenticeship levy came into effect in April 2017. The Apprenticeship levy is 0.5% of a company payroll, paid by all employers with a payroll in excess of £3 million per annum. The objectives of the Apprenticeship levy are as follows:
- Put the control of Apprenticeship funding in the hands of employers
- Enable employers to decide where, and how, the Apprenticeship money is spent
- Give employers, who commit to Apprenticeships, the opportunity to get more out of the levy fund than they put in
- Encourage the recruitment of more Apprentices and the investment in Apprenticeship programmes to upskill existing workforces
- Through the additional employer incentive, encourage the employment of 16-18-year-olds
- Fund the ambition for raising both the quality and quantity of Apprenticeships in England and assist the government in achieving its ambition to deliver 3 million Apprenticeships by 2020
- Further change the perception of Apprenticeships to be regarded as a viable alternative to university
We work closely with our employer partners to ensure the levy is being utilised effectively and is returning the best possible value. Our dedicated approach recognises each individual client's requirements and we develop tailored Apprenticeship solutions that drive the maximum benefits for your organisation. Find out more about our employer partnership approach or contact us for more information.
Your Apprenticeship levy questions answered
Who has to pay the Levy?
Employers in England with a payroll exceeding £3m per annum.
Separate arrangements apply to employers in Scotland, Wales and Northern Ireland.
Payroll greater than £3m per annum?
If your payroll exceeds £3m, then an Apprenticeship levy of 0.5% will be applicable to your business, by way of contribution to the cost of funding Apprenticeships.
This contribution is to be paid monthly, direct to HMRC and has a £15,000 allowance to be offset.
The government intends to top-up this contribution by 10%, enabling most employers a greater investment in Apprenticeships than they have contributed.
You can invest in new or existing employees. Employees of any age can be eligible for an Apprenticeship, so long as there is a significant requirement for training.
Should you wish to spend more on Apprenticeships than available in your fund, there will be a requirement to contribute to this cost.
Payroll less than £3m per annum?
If your payroll is less than £3m per annum, then there is no requirement for you to pay the Apprenticeship levy.
If you have less than 50 employees, you will not have to make any contribution to the cost of any Apprentices you employ under the age of 18.
There will be a requirement to pay a 10% contribution towards the training of Apprentices over the age of 19. The government will contribute the additional 90%.
If you have more than 50 employees, then this 10% contribution will be applicable to Apprentices of all ages, and the government will fund the remaining 90% of the cost.
How much is the Levy?
The Apprenticeship levy is 0.5% of your company payroll. There will be a £15,000 allowance, applicable to all employers, meaning that only businesses with payrolls in excess of £3m are subject to making payment. £15,000 being offset as 0.5% of £3m.
For example, a company with an annual payroll of £4.5m would pay a £7,500 annual levy.
£4.5m - £3m = £1.5m
x 0.5% = £7,500
The Skills Funding Agency have produced a useful tool click here to help employers understand what levy they will pay and how they could use the new digital service to plan and fund training.
You can also call us to discuss your specific circumstances or use our calculator for a quick guide as to what you can expect to pay.
How do we pay?
Payment is made to HM Revenue and Customs (HMRC) through the Pay as You Earn (PAYE) process.
How can we use our contribution to invest in Apprenticeships?
If the Apprenticeship levy is applicable to your business, you will be able to access funding for Apprenticeships through your Digital Apprenticeship Service account.
You will be able to use this to pay for training and assessment for Apprentices in England. The service will also help you find approved training providers such as Paragon Skills, who can help you develop and deliver your Apprenticeship programme.
We can help you get the most out of Apprenticeships and effectively plan your investment in this area.
What is the Apprenticeship Service Account?
The Apprenticeship Service Account has been set up to make life easier for employers.
Once you have paid the levy to HM Revenue and Customs (HMRC) you will be able to access funding for Apprenticeships through your new Apprenticeship Service Account.
Online tools will be available over the next year and you will be able to register to create your account from January 2017. This way you’ll be able to familiarise yourself with the service before April 2017.
What are the benefits to employers?
The best way to benefit from the levy is to invest in Apprenticeships.
Significantly the introduction of the levy changes the funding structure of Apprenticeships and puts employers in control. This is shining a spotlight on our industry, the quality of Apprenticeships and what employers and employees stand to gain from them.
Whether or not your business is required to commit to the levy, its introduction presents an ideal opportunity to reassess your current involvement with Apprenticeships and what they can deliver to your business. If you don’t already employ Apprentices, we think you’ll be surprised by the benefits they can bring to your business.
As a top 10 Apprenticeship training provider at Paragon Skills we can assist and advise you on how to effectively plan for the levy and achieve the greatest benefit to your business.
You can call us today for experienced industry advice and information on all the ways you stand to benefit from investing in Apprenticeships.
What is the role of Apprenticeship Training Providers?
Apprenticeship training providers like Paragon Skills can help you develop and deliver your Apprenticeship programme.
We offer guidance and advice on the best way to invest in Apprenticeships and effectively plan how to utilise your levy contribution.
We can also help with recruiting, vetting and accessing potential Apprentices, whether they are new to your business or current employees.
Our passion lies in inspiring people to succeed. Therefore, we carefully track your Apprentice’s progress and achievements, involving your team at every step, through to the successful completion of their qualification and their continued progression in your industry.
At Paragon Skills we are proud to be among the top 10 Apprenticeship training providers in England.
What is the Government's Vision?
“Nobody understands the skills employers need better than the employers themselves. That is why we are placing them in the driving seat” - English Apprenticeships : Our 2020 Vision
Find out more here
If you have any questions concerning the Apprenticeship levy, you can call Paragon Skills today on 0800 783 2545 to find out more and to discuss your business' unique requirements.
Annual Company Salary Cost (above £3m):
Annual Levy(payroll x 0.005 allowance)
Month Accumulationbefore 10% top up
Digital Account Monthly Accumulationafter top up
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