Apprenticeship Levy

Apprenticeship Levy

The government has introduced  a new Apprenticeship Levy as from April 2017.    If your company has a payroll bill of over £3 million per year then you will be required to pay the levy each month from April 2017.   This is done through the normal PAYE process.  Your annual payroll bill consists of all payments to employees that are subject to Class 1 National Insurance Contributions (including bonuses and commissions).

This is applicable to all types of employers including public and private sector companies, charities and education providers such as universities and academy groups.

The levy is calculated as 0.5% of your payroll bill each month.  All employers will receive an annual allowance of £15,000.   This means that employers with a payroll bill of less than £3 million will not pay the levy.

The levy covers:

  • All employees earning below the lower earning limit & the secondary threshold
  • Employees under 21
  • Apprentices under 25

The levy does not include:

  • Earnings of employees under 16
  • Earning of employees who are not subject to UK NICs
  • Earning on which Class 1A NICs are payable

Registering for the service

Registering for the service

If you are a levy paying employer you can now create an account using the apprenticeship service here.  This will allow you to receive funds for you to spend on apprentices, manage your apprentices and pay training providers.

If you are not a levy paying employer you won’t be able to use the service until 2018 at the earliest.

What you can spend the apprenticeship levy funds on

You can use the Apprenticeship levy funds to pay for apprenticeship training and assessment for apprentices that work at least 50% of their time in England and you can only spend up to the funding band maximum for that apprentice.

Calculate your Apprenticeship Levy

The apprenticeship levy is charged at 0.5% of your annual pay bill. For the first month of the tax year:

  • Divide you apprenticeship levy by 12
  • Subtract this figure from 0.5% of your monthly pay bill

For each month after April:

  • Calculate your total bill (year to date)
  • Add up your monthly levy allowance (year to date)
  • Subtract your levy allowance for the year to date from 0.5% of your total pay bill for the year to date.
  • Subtract the amount of levy you have paid in the year to date.

You will then need to inform HMRC how much you owe.   Paybureau Ltd will do that for you at no extra charge.

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