If you’re an employer with a pay bill over £3 million a year, you must pay the apprenticeship levy from 6 April 2017.
The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.
Less than 2% of UK employers pay the levy. Levy funds will create opportunities for young people across the country, delivering the skills British businesses need. The levy will give employers control of their training, agree a total price for each apprenticeship, which includes the costs of training and assessment.
In England, the government will top up employers’ levy with an extra 10%, paid directly to employers’ apprenticeship accounts. An employer’s pay bill is made up of the total amount of the employees’ earnings that are subject to Class 1 National Insurance contributions, such as:
– Pension Contributions
Levy-paying organisations will pay 0.5% of their PAYE bill. The levy can be reinvested into the organisation through Apprenticeship training – to new and/or existing staff.
What about non-levy-paying employers? Employers with a pay bill of less than £3 million a year will not need to pay the levy. At least 90% of non-levy-paying employers’ apprenticeship training and assessment costs in England will be paid for by the government. The government will ask these employers to make a 10% cash contribution to the cost, paid directly to the provider, and the government covers the rest (up to the maximum agreed funding band).
And what about businesses with fewer than 50 employees? There is additional Government support for small businesses. The 10% contribution will be waivered and the government will pay 100% of the costs. This applies to those employing an Apprentice aged 16-18 or aged 19-24 with an education, health and care plan.
Additional Government Support – All Employers
All employers receive a £1,000 payment if they employ an Apprentice who is:
- Aged 16-18 at the start of their Apprenticeship
- Aged 19-24 and has an education, health and care plan provided by the local authority or has been in the care of a local authority
Reference: Employer Guide to Apprenticeships