News: Levy Payments for Apprenticeships

Posted on 5th December 2016

How will the apprenticeship levy affect your business and how can you turn a mandatory payroll (tax)/deduction into a business advantage by investing in your employees.

At Rewards Training we deliver Apprenticeships in a variety of sectors including Business/Management, Hospitality and Health & Social Care. Our expertise on current apprenticeship funding and our insight into the future of levy funding, as well as changes to the apprenticeship programme, will ensure you are kept up to date and informed.

Levy payments can be used to fund apprenticeships right across your organisation, not just for new employees.

It doesn’t have to be complex; it’s your levy, and our aim is to help you make the most of it.

There will be further announcements from the Government about the levy in the coming months prior to the scheduled start in May 2017.  We will keep you updated via email and our website – www.rewardstraining.co.uk

 

What Is The Apprenticeship Levy?

  • The Apprenticeship levy is a payroll tax on UK employers to fund new apprenticeships.
  • The levy is set at 0.5% of your pay bill, this includes wages, bonuses, commissions, and pension contributions paid monthly through PAYE.
  • The government says that any UK employer, in any sector, with a pay bill of more than £3 million per tax year will pay the levy on a total pay bill over £3 million. However, the levy will be a monthly deduction, so in reality these costs will be taken in any month where your pay bill is over £250,000. If your pay bill in that tax year is below £3 million any levy deductions will be reimbursed.
  • You will hear talk of an ‘allowance’ of £15,000 per tax year to offset against your levy liability. This is confusing – all it means is that you only make levy payments on your pay bill in excess of £3 million per tax year. This ‘allowance’ is available on a monthly basis.
  • Employers in England who pay the levy and participate in apprenticeship programmes will receive more than they pay into the levy, through a monthly 10% top-up to their digital account.

 

Using Your Levy Payments

  • Employer of 250 employees, with an average gross salary of £20,000
  • Pay bill: 250 x £20,000 = £5,000,000
  • Levy entry point: = £3,000,000
  • Therefore Levy payable on £2,000,000
  • Levy sum: 0.5% x £2,000,000 = £10,000 annual levy payment

 

Levy payments will ‘expire’ 18 months after they enter your account. They’ll be used on a ‘first in, first out’ basis, so the sooner you become engaged with apprenticeships the better.

Expiry of levy funds – Levy funds will expire 18 months after they enter your account unless you spend them on apprenticeship training. Levy spend will be applied on a first in, first out basis (the government call this ‘sunsetting’). This also applies to any top-ups in your digital account.

 

To Find Out More About The Levy

Speak to us to help you review your current employee training and development budget to ensure that most of your apprenticeship training can be reclaimed through the levy. We can also help you to offset the costs of your training to maximise the benefit from your investment and minimise costs.

 

Extra support for 16-18 year olds – When you take on an apprentice who is aged between 16 and 18 at the start of their apprenticeship, you will receive a payment of £1,000 to help meet the extra costs of employing them via your training provider.

National Insurance Breaks for Employers of Apprentices Under 25  –Since April 2016 employers of apprentices under the age of 25 have no longer been required to pay secondary Class 1 (employer) National Insurance contributions (NIC) on earnings up to the Upper Earnings Limit (currently £40,000), for those employees.

The regulations around the levy and apprenticeship funding are complex. Rewards Training are able to support you to manage your levy through the government’s Digital Apprenticeship Service. We will help you to maximise the benefits you will recoup from your levy payments.

We welcome your feedback and are available to answer any of your questions about how the levy will affect your business.

Please get in touch: Email: info@rewardstraining.co.uk

Call: 01293 224225 Visit: www.rewardstraining.co.uk

Back to News ›

Testimonials

"The BHBPA is the most effective and dynamic business organisation I have ever worked with in over 30 years in Local Government. It has a very active and large membership whose points of view are taken seriously by all government structures. Peter Liddell does an excellent job in providing unique and enjoyable networking opportunities where members interact and discuss points of mutual interest. It provides a forum for businesses to discuss common issues, to share experiences and to play a powerful and meaningful role in the Burgess Hill community. The BHBPA provides important and credible support for all its members and ensures that their best interests are represented where necessary. "

Steve Cridland, CEO
(Burgess Hill Town Council)

""BHBPA is a really well organised and run group, great for networking and benefitting from knowledgeable local speakers with real business insight. Peter brings enthusiasm and humour which helps drive the association forward. I am glad to be part of it.""

Dave Farmer, German Translator
(Dave Farmer & Co)

"“We have been members of BHBPA from its inception, and seen the organisation steadily grow and expand into the dynamic entity it is today, bringing positive benefits to all its members.""

Peter Hook, Manager
(Computer Systems Engineers)

"I am delighted to have a long-standing relationship with the BHBPA. Since its foundation the Association has gone from strength to strength and there is no doubt that it has brought huge benefits to its members and the business community as a whole through the partnerships it has formed with the local authorities, Sussex Police and local organisations. It is paramount that Burgess Hill businesses have an effective collective voice."

The Hon Nicholas Soames MP