The Apprenticeship Levy is part of the Government’s plan to help fund a further 3 million new apprenticeships by 2020. Large employers (with a payroll of over £3million per annum, regardless of whether they already employ apprentices or not) across all industries are required to contribute to the new Apprenticeship Levy which in turn helps your business fund apprenticeships.
Non Levy Paying Businesses
If you are an employer with less than 50 employees, you will not be required to contribute towards training costs for 16-18-year-old apprentices and you will receive a £1,000 payment to help with the cost of this. If you employ an apprentice who is 19-years-old and over, you will be required to pay 10% towards the cost of this training. Employers with a payroll of less than £3million per annum and 50 or more employees will pay a 10% contribution towards the costs of training apprentices.
To find out more about how Wiltshire College can support you to recruit and train an apprentice for your business, please contact email@example.com or call 0845 345 2235.
Large employers with a £3million plus payroll
Employers who pay the Apprenticeship Levy will be able to allocate their Levy contributions as digital vouchers to use to train their apprentices. Employers will be allowed to spend their digital vouchers within a period of up to 18 - 24 months. All employers will also receive a 10% ‘top-up’ payment.
As a major commitment to increasing both the quality and the quantity of apprenticeships in England, the reforms will also give employers the opportunity to add to and influence the new apprenticeship standards by developing their own standards to meet their precise organisational needs. These employers are known as Trailblazers.
- Employers will not pay the first £15,000 of the Levy, which means that the Levy will only be payable by companies with payrolls in excess of £3 million per year
- It will be payable by employers at the rate of 0.5% of the payroll cost through PAYE alongside Income Tax and National Insurance
- Public sector organisations will also pay the Levy if their payroll meets the above criteria and in addition, 2.32% of their workforce must be apprentices
How to calculate how much you will pay
To calculate how much Levy you will pay, follow these steps:
- Work out your pay bill which is made up of the total amount of your employees’ earnings that are subject to Class 1 National Insurance contributions. Employees’ earnings include any money they make from employment, such as wages, bonuses, commissions and pension contributions
- Work out what 0.5% of your total pay bill is
- Subtract the £15,000 allowance
Here's an example:
An employer with an annual pay bill of £5,000,000 will need to spend £10,000 on the Levy:
- levy sum: 0.5% x £5,000,000 = £25,000
- subtracting Levy allowance: £25,000 - £15,000 = £10,000 annual levy payment
To find out more about the Apprenticeship Levy contact us firstname.lastname@example.org or call 0845 345 2235.