The Apprenticeship Levy.

What it means to your business and how you can make the most out of it.

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All businesses with an annual wage bill over £3m must pay the Apprenticeship Levy.

You will pay the levy to HM Revenue and Customs through the Pay as You Earn (PAYE) process and can use this money to invest in apprenticeships for your current and future workforce.

The levy will be charged at a rate of 0.5% of your annual pay bill (wages and salaries). You will have a levy allowance of £15,000 per year and an additional 10% government imbursement to offset against your levy contribution.

Any unused credit will expire 24 months after it appears in your account so it is imperative to make the most of your funding.

What is the purpose of the Levy?

The purpose of the levy is to encourage employers to invest in apprenticeship programmes and to raise additional funds to improve the quality and quantity of apprenticeships.

The Apprenticeship Levy paid by businesses can be accessed by those same companies to fund their own apprenticeship training.

This forms part of the government’s plan to raise both the number and quality of apprenticeships by 2020.

The Chancellor stated that those paying the levy would be able to get out more than they put in, and that the government will improve the quality of apprenticeships by increasing the funding available per place.

What next?

After making your first levy payment, funds will available through your Digital Apprenticeship Service account. You can use this account to search for apprenticeships, choose a training provider and buy apprenticeship training.

Funds will expire 24 months after they enter your digital account unless you spend them on apprenticeship training.

Choosing your training.

It is important the apprenticeship training you choose compliments and enhances any existing training or internal development programmes you run and makes a measurable difference to your business –

Talk to us about what your business needs to stop, start or get better at and we will provide apprenticeship solutions to meet your needs.

How does it affect SMEs?

Unused levy funds, (i.e. those that have gone beyond 24 month expiry date) will be used by the government to fund apprenticeships training for SMEs. Skills Minister Nick Boles told the House of Commons in March that the £2.5bn raised by the levy for training in England would be expected to stretch to cover all employers with apprentices, regardless of their size, as there would be many employers not using the money in their digital accounts.

Does the government contribute? 

As an employers levy tax goes into the digital account, it gains a 10% top up from the government. That means for every £1 that enters a business’ digital account it gets an additional 10 pence.

Using the £6m payroll business as an example, if a business pays £15,000 in levy payments throughout the year, they will also gain an additional £1,500 from government, totalling £16,500 to pay for apprenticeship training.