Do you keep hearing the phrase apprenticeship Levy and have no idea what it is about? This blog gives you the information you need to make things a little clearer.
What is the Apprenticeship Levy?
The Apprenticeship Levy came into effect on 6 April 2017 and is part of the Government’s plan to increase the quantity and quality of apprenticeships. It is an amount paid at a rate of 0.5% of an employer’s annual pay bill, but not all businesses need to pay it.
Who needs to pay the Apprenticeship Levy?
As an employer, you are required to pay Apprenticeship Levy each month if you:
- have an annual pay bill of more than £3 million.
- are connected to any company or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million.
The rules for connected companies are the same for Apprenticeship Levy and Employment Allowance.
What do you need to do?
If you are required to pay the Apprenticeship Levy you must report and pay monthly through your Employee Payment Summary. All sectors must pay the levy if they have an annual pay bill of over £3 million (including any connected companies or charities).
The sectors that have specific rules for paying Apprenticeship Levy are:
- Franchises
- Off-payroll working in the public sector
- Short-lived companies
- Managed service companies
- Employment or recruitment agencies
- Joint Ventures
- Schools
For more information about these, click here
What is your annual pay bill?
Your annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions such as wages, bonuses and commissions.
What happens to the money once it has been paid?
The money will be collected by HMRC and for apprenticeship training in England will be accessed via your Digital Apprenticeship Service (DAS) account. You will be able to use this to pay for your apprentice training.
What can Levy be spent on?
When an apprenticeship has started, monthly payments will be automatically taken from your digital account and sent to the training provider. This spreads the cost over the lifetime of the apprenticeship. You will see funds entering your digital account each month as you pay the Levy, and funds leaving the account regularly each month as you pay for training.
For more information about the apprenticeship levy click this link: https://www.gov.uk/guidance/pay-apprenticeship-levy