Advice on the Apprenticeship Levy
If an organisation has a payroll of over £3 million, it’ll need to pay 0.5 per cent to the government.
- What you have to pay
You are required to pay the apprenticeship levy at a rate of 0.5 per cent if your annual UK payroll is over £3 million. However, the government will also provide an annual allowance of £15,000 so employers can draw down the full amount of their levy funds to spend on apprenticeship training.
Here's how it works:
Non-levy paying organisation Levy-paying organisation Annual pay bill: £1,000,000 Annual pay bill: £10,200,000 Levy calculation: 0.5% x £1,000,000 = £5,000 Levy calculation: 0.5% x £10,200,000 = £51,000 Minus levy allowance:
£5,000 - £15,000 =
£0 annual levy payment
Minus levy allowance:
£51,000 - £15,000 =
£36,000 annual levy payment
You can use this apprenticeship levy calculator to work out if your organisation will pay into the levy, estimate how much you'll have to spend on apprenticeship training and the government's contribution towards the cost of training.
- How to get your money back
If you are a levy-paying employer, you must declare your levy through the PAYE process. You will then receive your funds every month in proportion to the number of your employees based in England.
Levy funds can be managed through the dedicated online apprenticeship service and can be spent on apprenticeship training fees in England. Levy-paying organisations will also benefit from a 10 per cent monthly top-up from the government.
For every £1 that enters your online account, the government will pay a further 10 per cent. Using the above example, assuming a levy-paying employer has all of their employees based in England, they will receive £3,300 a month. Any allowance not used will be carried into the following month, so you won’t miss out on additional government funding.
You have 24 months to spend the funds in your account, otherwise they will be returned to the government.
- What support you get if you don't pay the levy
The costs of training are supported by the government, covering 95 per cent of the course fees. Plus there’s no National Insurance to pay if the apprentice is under 25.
Employers with fewer than 50 employees could get up to 100 per cent funding if the apprentice is under 19 or if they are 19 to 24 and have previously been in care or have a local authority Education and Health Care Plan. Additional incentive payments of £1,000 are also available for employers who take on apprentices that meet either of these criteria.
As of April 2019, levy-paying employers with unused apprenticeship levy funds may transfer up to 25 per cent of their annual funds to any employer. Employers may transfer funds to as many employers as they wish to be used for the cost of training and assessment of apprentices.
More information can be found on Gov.uk