Apprenticeship Levy Support Service

Overview

Businesses with an annual pay bill of £3 million or more pay the Apprenticeship Levy. But how do you ensure you can recoup all the money you pay each year into the Apprenticeship Levy?

Companies paying the Apprenticeship Levy want to know the best ways to use the money in their digital accounts.

Apprenticeship Levy Support Service

Our support service gives you the best, most comprehensive and up to date advice on how to use your apprenticeship levy funds. The service we offer enables you to discuss any concerns or queries regarding apprenticeships and your options when spending the levy.

We will work with you to create a strategy to maximise the ROI on your levy contributions and support you in the planning and implementation of an apprenticeship scheme.

FAQs

What is the apprenticeship levy?

The Apprenticeship Levy was announced in the November Spending Review. It is essentially an additional payroll tax, set at 0.5% of an employer’s annual pay bill, collected through PAYE.

The levy affects all employers with a presence in the UK, from businesses to charities to schools, regardless of sector, with an annual pay bill of more than £3 million. Groups of companies under a common ownership structure will be treated as one business.

The Levy was introduced in April 2017.

Your pay bill is based on the total amount of earnings subject to National Insurance Contributions. Essentially, any person who is on your payroll and paid through PAYE is included in your pay bill. Earnings include any remuneration or profit coming from employment, such as pay, bonuses, commissions, and pension contributions that you pay National Insurance on.

While the levy is set at 0.5% of an employer’s gross annual pay bill, employers have an allowance of £15,000. So if an employer has a pay bill of £10 million, they will end up paying an annual fee of:

£10 million x 0.5% - £15,000 = £35,000

The levy allowance operates on a monthly basis and accumulates throughout the year. This means you have an allowance of £1,250 a month. Any unused allowance is carried from one month to the next.

The total levy amount is collected monthly by HMRC, and the funding is then made available to employers via a digital account, through which they can pay for training for apprentices. If an employer does not spend their entire levy amount on apprenticeships, then the unspent portion will be made available to other employers to spend on apprenticeships.

If you are part of a group of employers, you must decide what proportion of the levy allowance each employer in the group will be entitled to. This decision must be taken at the beginning of the tax year and will be fixed for that tax year. Each employer will then calculate what they have to pay through the same processes set out above, but using their portion of the £15,000 allowance.

Any apprenticeship levy payment to HMRC is an allowable deduction for Corporation Tax purposes.

Your pay bill will be based on the total amount of earnings subject to National Insurance Contributions. Essentially, any person who is on your payroll and paid through PAYE is included in your pay bill. Earnings include any remuneration or profit coming from employment, such as pay, bonuses, commissions, and pension contributions that you pay National Insurance on.

The government will apply a 10% top-up to your levy account for spending on apprenticeship training in England. They apply the top-up monthly, at the same time the funds enter your digital account. So for every £1 that enters your digital account to spend on apprenticeship training, you will get £1.10. Funds (including top-ups) expire 24 months after they enter your digital account unless you spend them on apprenticeship training.

Funds in your digital account can only be used towards the costs of apprenticeship training and spent with an approved training provider.

They cannot be used to pay for other costs associated with your apprentices or wider training effort e.g. pay, statutory licences to practise, travel and subsidiary costs, managerial costs, or the costs of establishing an apprenticeship programme. The government is currently working on a plan with industry groups to ensure that from 2018 employers can transfer some of the funds in their digital account to other employers in their supply chains or sector.

Some employers paying the levy may find that the funds in their digital account aren’t enough to cover the full cost of training all the apprentices they want to employ. In order to support further apprenticeship delivery, the government will contribute 90% of the total costs of the additional delivery.

Every apprenticeship standard and framework is placed in a funding band, which set the maximum amount of funding that can be used towards training costs over the length of the apprenticeship. The same funding bands apply to all employers paying for apprenticeships.

Apprentices who were accepted onto an apprenticeship programme before May 2017 will be funded for the full duration of the apprenticeship under the terms and conditions that were in place at the time the apprenticeship started.

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. As of May 2017, you can choose the training you’d like your apprentices to receive and an approved training provider to deliver it, and a price is then agreed with that provider. The government will make a contribution of 90% to the cost of this training.

 

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We’re all about making an impact, be that individuals making an impact through their day-to-day work, or by organisations making their impact on our economy.

As a national training provider, we make this impact throughout the UK, with expertise in childcare, healthcare, business, and IT and digital skills. 

For further information, complete the form below, call us on 01753 596 004, or email us.

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