Levy Payments for Apprenticeships

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

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