Apprenticeship Levy

Harrow College will be hosting two events to inform all employers about the forthcoming Apprenticeship Levy affecting both large employers and SMEs. Click the link below to find out more.

Eventbrite - Get ready for the Apprenticeship Levy with Harrow College

 

What is the apprenticeship levy and who pays it?

  • From 6th April 2017, some employers will be required to contribute 0.5% of their pay bill to a new apprenticeship levy.
  • The apprenticeship levy applies to all employers in any sector, with a pay bill of more than £3 million each year.
  • Levy allowance is not a cash payment and funds can be accessed via a new digital apprenticeship service.
  • Employers pay their levy to HMRC through the PAYE process and will start in April 2017.
  • The levy aims to encourage employers to engage with and embrace apprenticeships as a mechanism through which to support skills and talent development.

How much levy will I pay?

  • The levy has been set at 0.5% of payroll.
  • The levy takes into account the total of all employees’ earnings but there is a £15,000 allowance to offset against the levy.
  • Where an employer may operate multi payrolls, they will only be able to claim one allowance.
Levied Employer Non-Levied Employer

Employer of 250 employees, each with a gross salary of £20,000

Pay bill:

250 x £20,000 = £5,000,000

Levy sum:

0.5% x £5,000,000 = £25,000

Allowance:

£25,000 - £15,000 = £10,000 annual levy payment. With a levy payment of £10,000, an employer would have a levy pot that can fund around four apprentices.

Employer of 100 employees, each with a gross salary of £20,000

Pay bill:

100 x £20,000 = £2,000,000

Levy sum:

0.5% x £2,000,000 = £10,000

Allowance:

£10,000 - £15,000 = £0 annual levy payment.                                                       

 

Top-ups

  • The government will apply a 10% top-up to the funds you have for spending on apprenticeship training.
  • The top-up will be applied monthly at the same time the funds enter your account.
  • For every £1 that enters your digital account to spend on apprenticeship training, you get £1.10.

Employers that don’t pay the levy

  • If you do not pay the levy, you won’t need to use the digital apprenticeship service to pay for apprenticeship training and assessment until at least 2018.
  • You will be asked to make a contribution to the cost of training and the government will pay the rest, up to the maximum amount of government funding available for that apprenticeship.
  • This will be paid directly to the training provider and you will be able to spread it over the life time of the apprenticeship.
  • As both you and the government make a payment, it is called ‘co-investment’.

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