The Apprenticeship Levy

A levy on large employers to fund new apprenticeships.

The Government, which has promised to create 3 million apprenticeships by 2020, has just published draft legislation introducing the Apprenticeship Levy. This measure seeks to encourage more employers to hire apprentices and transfer the cost of the system from Government to corporate Britain.

This Levy on UK employers will be used to fund new apprenticeships and will come into force in April 2017. It supports the Government’s commitment to improving productivity by increasing the quantity and quality of apprenticeships.

How much is the Levy?
The Levy will be charged at a rate of 0.5% of an employer’s total pay bill. Each employer will receive an allowance of £15,000 to offset against their Levy payment which means that the Levy will be payable only by employers with pay bills in excess of £3 million a year.

The total pay bill will generally exclude benefits in kind, but is also expected to include other remuneration which is subject to PAYE or NIC withholdings.

How is payment managed?
The payment for the Levy will be collected via an employer’s PAYE return to HMRC alongside income tax and NI Contributions.

Which employers does this affect?
The Levy will, in principle apply to all UK employers, across all sectors, regardless of whether they already employ apprentices or not. Large companies with a payroll bill of over £3 million per annum will pay the Levy. It is calculated upon the size of the company and the earnings of its employees.

How does this affect employers in Scotland?
The Levy will be paid into a central Treasury fund. Employers in England will be able to access funds via a digital account to pay for qualifying apprenticeship training programmes. As skills training is a devolved policy area in Northern Ireland, Scotland and Wales, the Government will be carrying out further work with the devolved administrations to ensure that the Levy works in conjunction with their respective skills policies.

Following these headline news announcements and key facts about the Levy, there are still of course a number of details the Government has to clarify and this is expected in the Finance Bill in the Spring. In the meantime however, if you would like to discuss the Apprenticeship Levy and how it might affect your business as well as consider the opportunity for skills development, please don’t hesitate to get in touch with us.

Dundee Employment Law
Afren House
Whitehill Faulds
Bonnyton Road
Kirkton of Auchterhouse
By Dundee
T: 01382 320357