The Apprenticeship Levy - some key facts

Author: Susie LancasterDate: 2 years 5 months Ago

Hello, my name is Susie Lancaster and I work for the NHS Business Services Authority (NHSBSA).  I am part of the Great Place to Work Delivery Group and I was asked to write a blog on the new Apprenticeship Levy that is coming into force from April 2017 and provide some detail about how it might impact the FFF community.



As you will probably know by now, apprenticeships are on the agenda. The current Government has a target of having 3 million apprenticeships in England by 2020. This blog will provide you with updates on the apprenticeship reforms and what they mean, with useful links and helpful tips.



To start with, here are some key facts about the new apprenticeship levy

  • From April 2017, employers with a pay bill over £3m will be charged a levy of 0.5% of their pay bill. This “pay bill” will be based on total employee earnings subject to Class 1 secondary NICs.  The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance. Further information can be found at: https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work 

     
  • The 0.5% levy is on your full UK payroll bill, not just the amount over £3m. 

     
  • There will be a levy allowance of £15,000 per year to offset against the levy.

                            Example for an employer who would pay the levy:

                                      Employer’s annual pay bill = £5,000,000:

                                      Levy sum: 0.5% x £5,000,000 = £25,000

                                      Subtracting levy allowance: £25,000 - £15,000 = £10,000 annual levy payment

  • Payment will be taken monthly, in real time, meaning as your pay bill changes each month, the levy amount taken will be reflected. The money will be taken by HMRC and put into a new Apprenticeship Service account that employers will then be able to access and use the money in their account to pay Training Providers.  

     
  • Your organisation will need to set up an Apprenticeship Service account. You will need to register here.

     
  • The levy payment will be ring-fenced in the form of an electronic voucher in the employer’s Apprenticeship Service account, with the first payment being due in May 2017.

      
  • Each monthly payment will expire after 24 months.

     
  • The government will apply a 10% top-up to monthly funds i.e. all funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value. Further information can be found at: https://www.gov.uk/government/publications/apprenticeship-funding-from-may-2017

     
  • The levy can be claimed back and spent on apprenticeship training for all employees at all levels and ages, including graduates who may be eligible for Level 6 or 7 apprenticeship programmes.

     
  • The levy can be used to fund existing employee development as long as the qualification is required for their job, and significantly different from any other qualification they already hold.

     
  • As well as the Apprenticeship Levy, a legislative target is due to come in to force whereby organisations with 250 or more staff will be expected to employ a minimum of 2.3% of their workforce as apprentices. 

     
  • If you spend all of your levy on apprenticeship training but still want to employ additional apprentices, the government will support 90% of any additional training costs in excess of the levy funds, with employers only having to pay 10% towards the extra cost of training.



Coming Soon - a 'How to Guide' on employing an apprentice in your organisation.

Diana Ormandy's picture
2 years 5 months Ago

Excellent Blog Susie.  Despite information being around about the levy for the last 12 months a lot of people are still unaware of the impact on their organisions.  I have attached a fact sheet in a separate blog that was developed following the North West FSD leads meeting to raise awareness of the Levy.

David Ellcock's picture
2 years 5 months Ago

And here's the link to Di's blog to save you having to search for it... http://www.futurefocusedfinance.nhs.uk/blog/apprenticeship-levy-fact-sheet