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Introduction to the Apprenticeship Levy
Summary
From spring 2017 a new levy on businesses with a pay bill of over £3 million will be introduced; requiring them to invest in apprenticeships.
As part of its drive to train 3 million new apprentices by 2020 - and to address the decreased focus on employee training outside the work place - from 6th April 2017 the Government will introduce a levy on businesses to invest in apprenticeships.
Employers who qualify to pay the apprenticeship levy
If your organisation, including any connected companies or charities, has an annual pay bill of more than £3 million you will pay the apprenticeship levy. They will be required to contribute 0.5 per cent of their pay bill on the levy.
Employers who don't qualify to pay the apprenticeship levy
Companies with a pay bill of under £3 million do not have to contribute to the levy, but can still benefit from the scheme by accessing up to 90% of the training funds from the Government for apprentices they employ through one of the recognised Apprenticeship Standards.
Access your levy funds through the apprenticeship service
The apprenticeship service is an online digital system that enables employers qualifying to pay the levy to manage their apprenticeship programme. Once UK employers have paid the levy, they will be able to access funding through their apprenticeship service account, enabling them to select and pay Government-approved training providers and post apprenticeship vacancies. The government will also apply a 10% top-up to funds within employers' apprenticeship service accounts - this top up will be applied at the same time as funds enter the account each month. Businesses will have 24 months to spend the funds within their account on training services before they expire.
Employers can also benefit further by accessing an additional 20% of funding for each apprentice they train aged between 16 and 18. Apprenticeships that fall into the STEM category (Science, Technology, Engineering, Maths) will also receive a higher level of funding.
Apprenticeship Levy Allowance
Employers who aren't connected to any other companies or charities will have an Apprenticeship Levy allowance of £15,000 each year. The allowance reduces the amount of levy employers pay by £15,000 across the year and cannot be carried over into the next tax year.
Companies connected to other companies and charities will only get one £15,000 allowance to distribute between them. In this case, the allowance can be allocated between all of the PAYE schemes or all of the connected companies and charities. Once decided, companies need to state how they have allocated the allowance the first time the levy is paid. This cannot then be changed during the tax year.
Apprenticeship Levy reporting
The reporting of the levy will be carried out via Real Time Information in monthly Employer Payment Summary (EPS) submissions which Sargent-Disc will manage on behalf of its payroll clients.
If employers would like Sargent-Disc to manage this process on their behalf as an authorised agent, they must create their Apprenticeship Service account first and then enable access. Please contact us at payroll@sargent-disc.com if you have an account so that we can submit figures on an Employer Payment Summary and pay any levy contributions to HMRC each month.
Register for the Apprenticeship Service
Sign up for the Apprenticeship Service here
Read more about the Apprenticeship Levy here
