The Apprenticeship Levy is charged on employers’ “paybills” at a rate of 0.5%. The levy is payable through Pay as You Earn (PAYE) and is payable alongside income tax and National Insurance. To keep the process as simple as possible “paybill” will be based on total employee earnings subject to Class 1 secondary NICs.
Each employer receives one annual allowance of £15,000 to offset against their levy payment. There is a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls are only be able to claim one allowance.
1.) If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017. You can find out how to do this here.
You will report and pay your levy to HMRC through the PAYE process.
The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.
Detail on how to setup and use your online account can be found here.
2.) If you do not have to pay the levy then you can still receive support to pay your apprentices.
From May 2017, you will pay 10% towards to the cost of apprenticeship training and government will pay the rest (90%), up to the funding band maximum.
If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018.
Instead, you’ll need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that you have paid your contributions as a condition of government paying its contribution.
There are 2 different types of apprenticeships to choose from:
- apprenticeship standards– each standard covers a specific occupation and sets out the core skills, knowledge and behaviours an apprentice will need; they are developed by employer groups known as ‘trailblazers’
- apprenticeship frameworks– a series of work-related vocational and professional qualifications, with workplace- and classroom-based training
To choose training:
- use the ‘Find apprenticeship training’service to select an approved apprenticeship training provider
- If you are using a standard, use the register of apprenticeship assessment organisationsto select an approved assessment organisation.
If you would like to discuss any of this further then please contact us on 0116 2423400
Becky Edwards, Payroll Manager