APPRENTICESHIP LEVY FACT SHEET
Let’s keep this short and sweet, here are the key facts and details you need to know about the Apprenticeship Levy. If you want a deeper insight, we have added some important links at the end of this short article.
WHAT IS THE APPRENTICESHIP LEVY?
The Autumn Statement 2015 sprung a surprise ‘payroll tax’ to help fund an increase in apprenticeships. The apprenticeship levy will be set at 0.5% of an employers wage bill and will be collected through PAYE.
This Levy is designed to help create three million apprenticeships starting by 2020. In the last parliament, 2.4 million apprenticeships were delivered.
HOW WILL THE LEVY WORK?
I think this diagram taken from a August 2015 BIS white paper explains it rather well.
WHEN DOES THIS HAPPEN?
The Apprenticeship Levy will be introduced in April 2017 and according to Construction Enquirer will be paid through Pay As You Earn by 2019-20.
WHO PAYS THE APPRENTICESHIP LEVY?
Any company with a payroll in excess of £3,000,000 per annum. So 98% of employers will pay no levy.
HOW IS THE PAY ROLL CALCUATED?
Paybill will be calculated based on total employee earnings; it will not include other payments such as benefits in kind. It will apply to total employee earnings in respect of all employees.
DO YOU REALLY HAVE TO PAY?
If eligible then yes… legislation to permit the imposition and collection of the apprenticeship levy will be introduced in the Finance Bill 2016.
HOW MUCH WILL I HAVE TO PAY?
The apprenticeship levy will be set at 0.5% of an employer’s wage bill. However, this will be offset by a £15,000 tax-free allowance. So, let’s simplify this with some examples from the BIS November 2015 Report:
EXAMPLES OF APPRENTICESHIP LEVY
EXAMPLE ONE: Employer of 250 employees, each with a gross salary of £20,000:
Paybill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual levy payment
EXAMPLE TWO: Employer of 100 employees, each with a gross salary of £20,000 would pay:
Paybill: 100 x £20,000 = £2,000,000
Levy sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual levy payment
HOW DO I PAY THE APPRENTICESHIP LEVY?
The Apprenticeship Levy will be collected via Pay As You Earn (PAYE)
I DON’T HAVE TO PAY, CAN I STILL TAKE ON AN APPRENTICE?
YES! All employers who do not pay the levy will be able to access government support for apprenticeships.
WHERE CAN I READ MORE DETAILED INFORMATION?
Right here on the Government Website: APPRENTICESHIP LEVY. Here is the link to the official Government response in PDF format: APPRENTICESHIP LEVY RESPONSE 2015
WHO DO I CONTACT IF I WANT TO EMPLOY AN APPRENTICE?
Northern Apprenticeships & Business Training offer a FREE apprentice recruitment service. Fill out the form and we will get in touch.