The Apprenticeship Levy – A Quick Reference Guide

How to Set Achievable Personal Development GoalsUnravelling the Jargon – What Does it Mean For You

On the 6th April 2017 the apprenticeship levy will be introduced by the UK Government. This will change the way the Government funds apprenticeships in England. So what will this mean to you and what actions are required of you if you wish to benefit from the funding. Read our summary and quick reference guide.

Who Pays The Levy

There are 3 categories

  1. Employers With An Annual Wage Bill Over £3m

Employee earnings include what they make from employment such as wages, bonuses, commissions and pension contributions. they don’t include benefits in kind or reimbursement of expenses

2. SME’s

SME’s (those with a wage bill of less than £3m a year) will have to pay 10% towards apprenticeships. the Government pay the remaining 90%.

3. Companies With Under 50 Employees

100% of the costs covered for 16 to 18 year olds

How Much Do You Pay

  1. Wage Bill Over £3m

0.5% of wage bill. Example of an employer with annual wage bill of £5m will need to contribute £10,000 to the levy.

  • levy sum:0.5% x 5,000,000 = £25,000

The Government are offering a ‘levy ‘allowance’ of £15,000 which when deducted from the £25,000 gives total payable of £10,000.

The Government are also offering a 10% top-up payment on what you pay into the levy. That means for every £1 paid you get £1.10 to spend on apprenticeships.

2. SME’s

You pay 10% of the value of the respective apprenticeship. The Government, as with the current system, will attribute a value, which will be capped, to each apprenticeship.

3. Less Than 50 Employees

You pay nothing for 16 to 18 year olds

For more information on how to estimate your levy contribution visit the Government website here

Talent Management

Paying the Levy

If you have a wage bill of more than £3m you’ll start paying the levy in May 2017. You need to have registered with HMRC before the 6th April Each month you’ll have to:-

  • Let HMRC know whether you need to pay the levy
  • Include the levy you need to pay in your usual PAYE payments

Any apprenticeship levy payment to HMRC will be allowable for Corporation Tax.

Accessing Money Paid Under the Levy

You will be able to access the funding for apprenticeships through a new digital apprenticeship service account.

Does The Levy Just Apply To England

Apprenticeships are a devolved policy which means authorities in each of the UK nations manage their own apprenticeship programmes. The digital apprenticeship levy system will support the English system. Scotland , Wales and N. Ireland have their own arrangements.

However payment of the levy will apply to all employers across the UK with a pay bill over £3m. The UK Government will then apportion how much money is to be kept within the English system and paid back to each of the devolved systems. It is then up to them as to how they use this money as it is not ring fenced in those respective nations.

Behavioural Profiling

Do You Have To Use Apprenticeships For Your Training

No. There is no obligation to use apprenticeships to train your staff. It is discretionary as they may not fit your organisational training needs. To work out if they are a good fit for your staff you have to consider:-

  1. Apprenticeships have to last a minimum of 12 months and can be up to 18 months.
  2. The Level of Commitment. This requires a significant commitment on the part of the employee and the employer
  3. What is your staff turnover like? If you have a high staff turnover will they actually last the course to complete a 12 to 18 month course and are you prepared to invest in them?
  4. 20% has to be delivered using off-the-job training. This again introduces a potential cost for the employer
  5. The occupational competency of your staff. Are they able to complete this type of qualification or would they be better doing  a bespoke course designed to meet their learning needs and suited to their learning styles.

What Are the Alternatives

One alternative is to continue to pay for bespoke or accredited training and qualifications, such as ILM, but which aren’t on the apprenticeship framework

Video From ILM With In Depth Explanation of How The Levy Will Work

Please not this is our interpretation of the reforms. Also things change quickly so please click on this link to get the current information on the levy from the Government.