23 November 2016

Are you aware of how the Apprenticeship Levy will affect your business?

The new Apprenticeship Levy comes into effect from 6 April 2017 make sure you are prepared for the impact this could have on your business by reading our quick guide below. 

Apprenticeship levy - who is liable?

Everyone is liable for the levy. It is a 0.5% tax on your pay bill, with each company receiving a £15,000 allowance from 6 April 2017.
A pay bill comprises the total amount of your employees' earnings that are subject to Class 1 National Insurance contributions, such as wages, bonuses, commissions and pension contributions. If your pay bill is £3m, 0.5% of that amount will be £15,000, so an allowance of £15,000 will mean that you do not have to pay any levy. This is why Government talks about the levy only applying to companies with a pay bill higher than £3m.

However if your pay bill is £5m, 0.5% of that amount will be £25,000 therefore after deducting your levy allowance you will be left with £10,000 to pay. 

How do I pay the levy?

Include the levy that you need to pay in your usual PAYE payment to HMRC by 19 (or 22 if you report electronically) of the following month.

What if my company is part of a group?

The important point to note is that there is only ONE £15,000 allowance for a group of connected companies, and at the start of the tax year you will need to allocate the portion of the allowance that you want for each company in the group. This is then fixed for a year.

What if my company is based in Scotland, Wales or Northern Ireland?

The levy is a UK levy and therefore all UK companies will have to pay. 

How do I get to spend the levy that I am paying?

The amount of levy payments that you make will be added to your digital account. This new Digital Apprenticeship Service (DAS) is being set up to allow you to manage your apprenticeship payments. You will be able to access them from January 2017. 

If you are a group of connected companies, you will be able to link your funds to a single digital account. Government will add 10% to whatever funds go into your digital account. If you are a company operating in both England and any of the devolved authorities, the amount that will go into your account is based on the home addresses of your employees. It is worth noting that any monies in your digital account not spent will expire after 24 months.

You are not allowed to transfer money from your digital account to another company. The Government will continue to review this facility and expect to implement it in 2018.

Is funding still available?

New funding for apprenticeships comes into effect from 1 May 2017. New rates have been published for all frameworks and standards (trailblazer programmes are referred to as standards and existing programmes are referred to as frameworks). 

These are:

• Apprenticeship frameworks: funding bands from May 2017
• Apprenticeship standards: funding bands from May 2017

For more information for Apprenticeship Levy paying employers and non-levy employers click here

There are two other aspects of apprenticeship reform on the way that employers should be aware of. All Government funding of apprenticeships will change from 1 May 2017 with mandatory employer contribution, and new trailblazer standards are being introduced for apprenticeships. 

We will be holding a Twitter Q&A on 14 December. Follow the chat @BPIF