Apprenticeship Levy – Information for Paying and Non-Paying Employers

What are the changes?

Changes to the way apprenticeships are funded come into force on 6th April 2017 in the form of a new apprenticeship levy, which will be applied to all employers with an annual wage bill greater than £3 million.

Resources NE Ltd, who are an approved SFA Apprenticeship provider and are listed on ROATP (Register of Apprenticeship Training Providers), are committed to helping all employers (Levy and non-Levy payers) to understand the Levy and the apprenticeship reforms which are taking place. We will help all employers to make the transition to the new arrangements.

Any employers who are unsure about what they have to do, or who would like more information about existing apprenticeship schemes before the changes are introduced, should get in touch with us at the earliest opportunity.

Please call our number 0191 5366867
or email: apprenticeships@resourcesdev.co.uk for more information.

What is the Apprenticeship Levy?

All employers with an annual wage bill greater than £3million will be expected to pay a 0.5% tax on payroll.

The Government hope the changes will help to bridge the skills gap by encouraging more businesses to invest in future talent and help it fulfil its pledge to create three million more apprenticeships in the UK by 2020.

The levy will replace all taxpayer funding for apprenticeships for companies of all sizes.

What about SMEs that do not have to pay the levy?

Employers who do not pay the apprenticeship levy will not need to use the digital voucher to pay for apprenticeship training and assessment. However, they will be asked to contribute a ‘small proportion’ of funding toward the cost of their apprenticeship training if the apprentice is aged 19+. 16-18 apprentices have no change.

The employer will make an initial payment to the training provider and the Government will then pay the difference.

The Government will pay 95% towards the cost of training and assessment, and employers will pay the remaining 5%. (There are instances where government will pay 100%, please get in touch for details)

Calculating what you have to pay

All firms receive an offset allowance of £15,000.

Example: an employer who would pay the levy:

An employer with an annual wage bill of £5million:

Levy sum: 0.5% x £5,000,000 = £25,000

Offset allowance of £15,000, so £25,000-£15,000 = £10,000

This employer will pay a Levy of £10,000

What can levy funds pay for?

Funds can pay for apprenticeship training and assessment.

They cannot pay for apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships or the costs of setting up an apprenticeship programme.

How will the apprenticeship levy be collected?

The levy will be collected every month through the PAYE system alongside income tax and national insurance contributions.

Levy-paying employers will be able to see corresponding funds in a dedicated digital account shortly after their final declaration to HMRC, so after May 22.

What will employers get back?

Employers in England will be able to reclaim their levy contributions as digital vouchers to pay for training apprentices. The voucher system will not apply in Scotland, Wales or Northern Ireland.

Unspent funds in an employer’s digital account will expire after 18 months.

Employers that pay the levy will also receive a 10% top-up from Government to their total monthly contributions in England.

How to access your funds

Employers will be able to register to create an online account.

Will there be any extra financial support?

Employers who take on an apprentice aged 16-18 will receive an incentive to help meet the extra costs of employing them.

The same additional payment will be made to employers who take on disadvantaged apprentices aged 19-24 – for example those with an education and healthcare plan provided by the local authority or those who have been in local authority care.

The additional payment is £1,000 paid in instalments.

The scheme provides employers who hire a new apprentice between 1 August 2020 and 31 January 2021 with a payment of

£2000 for each new apprentice aged 16-24
£1500 for each new apprentice over the age of 25

The government will make this payment in addition to the £1000 payment that employers already receive for taking on an apprentice who is

aged 16 to 18
under the age of 25 with an education health and care plan

So for a 16-18 year old and those up to 25 with an EHCP there is £3000 from the government

The £2000 and £1500 are paid direct from the government at 50% after 90 days and 50% after 365 days.

Please get in touch

For help and advice on apprenticeships, the Levy and all the reforms taking place, please call Resources NE Ltd head office number 0191 5366867 or email:

apprenticeships@resourcesdev.co.uk

Or to contact via our web form

Click here