Apprenticeship levy 2017

From 6 April 2017 the government will introduce an Apprenticeship Levy that will apply to all UK employers in all sectors, even if they are paying into an existing levy. The charge will apply to an estimated 2% of employers; those with a total pay bill over £3m a year.

Businesses with large payroll bills will be affected directly by having to pay a monthly charge but all employers in England could benefit by accessing the funds raised, either directly or indirectly, to train apprentices.

What is the Apprenticeship Levy?

The Apprenticeship Levy is a payment that will be collected from qualifying employers in both the public and the private sectors and payments will be made via PAYE returns to HMRC.

The Levy will raise an estimated £3bn by 2019/20 to be used to increase the quality and number of apprenticeships. £2.5bn will be allocated to England and remaining £500m will be split between the Scottish Government, the Northern Ireland assembly and the Welsh assembly.

From May 2017, English employers with an annual payroll of more that £3m will be able to claim funding for apprenticeships through the digital funding service on WWW.GOV.UK

Smaller employers will be able to access the funding through their training and assessment providers who claim directly from the government with the first payment being made in June 2017.

As a devolved nation, it has been left to each government to decide how and if funds will be made available to employers in their country.

When does it become payable?

19 May 2017, payable to HMRC as part of the Pay As You Earn (PAYE) payment.

What size of business will need to pay the Levy?

The Apprenticeship Levy will apply to all businesses at a rate of 0.5% of their total monthly pay bill. However, employers will be entitled to an annual Levy Allowance of £15,000 and is claimed by applying a 12th of the allowance against the levy each month. Therefore, only those employers with a payroll bill in excess of £3m a year will have a net liability.

7. Apprenticeship Levy Examples
What does the Government contribute?

As the money goes into the digital account, it gains a 10% top up from the government. Therefore, if a business pays £1,500 in levy payments throughout the year, they will also receive an additional £150 from the government giving a total of £1,650 for apprenticeship training and assessment in their digital account.

Is there a time limit on spending the funds raised in a digital account?

Employers with access to the digital apprenticeship service will be able to administer the money and will be able to transfer up to 10% of it to other employers, such as suppliers.

If employers do not use the money in their account they will lose it after 24 months. Whenever a payment is taken from an employer’s digital account, the service automatically uses the funds that entered the account first and will minimise the amount of expired funds.

For further guidance on how the levy will impact upon your business please contact Ken Davies.

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business