Does the Apprenticeship Levy apply to my business?
Launching in April 2017, the Apprenticeship Levy aims to bolster the UK’s productivity by funding and creating three million apprenticeship starts by 2020.
Its introduction will affect any organisation that has an annual pay bill of more than £3 million and will require them to pay 0.5% of their pay bill into the Levy. There’s also a Levy allowance of £15,000 available to employers, which can be offset against their annual contribution.
In certain circumstances, it’s possible that employers with an annual payroll of under £3 million will pay into the Levy at certain points over the year and group companies, which separately don’t meet the threshold, will also need to pay.
Even if your organisation isn't required to pay into the Levy, you can still make use of funding from the initiative. Read our guide for non-paying employers to find out more.
If you think you’ll qualify for the Levy, or aren’t sure, book an obligation-free chat with our expert team today for bespoke advice on how best to engage with the initiative and recoup the money you’ll pay in.
Organisations that meet the threshold will need to calculate their monthly Levy contribution and pay this to HMRC via PAYE (Pay As You Earn).
If you qualify as a Levy payer, your first payment will be due in May 2017 and you’ll need to appraise HMRC every month on whether you’ll be paying the Levy and include your contribution in your regular PAYE payment. It’s also worth noting that Levy payments are allowable for Corporation Tax.
Once you’ve submitted your organisation’s payments to HMRC, funds will be transferred into your Apprenticeship Service Account, ready to be allocated to a training provider, and the government will add a 10% top-up contribution.
If your organisation makes up part of a group, which when combined, has a total annual pay bill of more than £3 million - the group will meet the threshold for Levy contributions.
Since the group will be treated as one entity, it’ll also only have a single £15,000 allowance that can either be shared equally among all constituent organisations, or reserved for a single company within the group.
Once the group comes to a decision on how to use its allowance, calculations will need to be made that reflect what will need to be paid once this is taken into account.
Connected companies can also choose to associate their PAYE schemes with a single account on the Apprenticeship Service Account by registering payroll numbers via HMRC.
Your eligibility for the Apprenticeship Levy applies to your workforce throughout the UK, however, you’ll only receive the contributions in your Apprenticeship Service Account (plus the government’s 10% top-up) on the amount you pay related to employees in England.
Tax policy applies UK-wide, however, skills and training has been devolved to the country’s constituent nations. And, while Scotland, Wales and Northern Ireland are in the process of examining how they’ll use the funding provided by the Levy, there are no firm plans in the pipeline.
You can read more about the complexities of the Apprenticeship Levy in devolved nations in our handy guide here.
If you’ve got any questions about how the Levy might impact your company, be sure to fill out the form below to book an obligation-free chat with our expert team. We can provide bespoke advice on qualifying criteria, connected companies and how best to recoup your funds by investing in training.