Depending on the size of your payroll, you may need to pay into this government programme. Scroll down to learn what is required of businesses – and how this scheme can benefit you:
The Apprenticeship levy is a payroll tax on UK employers to fund new apprenticeships.
The levy is set at 0.5% of your salary bill, this includes wages, bonuses, commissions, and pensions 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 offset against your levy liability. This means that you will 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.
Non-levy employers pay an agreed Employer Contribution with the remaining balance co-funded by the Government. This is 95% funded by the Government with a nominal contribution of 5% from the employer which can be paid in a lump sum or be broken down over the year to make this more affordable.
The levy is currently only for employers with a payroll of £3 million and above. For example:
Employers of 100 employees, with an average gross salary of £20,000
Pay bill: 100 x £20,000= £2,000,000
Levy entry point: = £3,000,000
£0 annual levy payment
Levy payments expire 24 months after they enter your account. They will be on a ‘first in, first out’ basis, so the sooner you become engaged with apprenticeships the better. The Government calls this ‘sunsetting’.
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