What is the Apprenticeship Levy?

From the start of April 2017, the Apprenticeship Levy started taking over the way in which apprenticeships are funded in the UK. The main crux of the Apprenticeship Levy is to create a centralised fund that will pay for three-million apprentices within the UK by 2020.

When you consider that in the 2015/16 year 509,400 apprentices were registered within the UK, the Apprenticeship Levy is something that has massively increased how many learners there are nationally by 200% over the course of any year. The Apprenticeship Levy is taken in the form of a new tax that only affects organisations with a PAYE bill of £3m or more, if this applies to your business you can expect a fee equal to 0.5% of your payroll collected by HMRC from May 2017…

As an example, let’s say you only pay the threshold amount (£3m), you’ll be liable for £15,000 for the Apprenticeship Levy. There is an upside to this, if your organisation gets a jump on the Apprenticeship Levy through careful planning you can recover 100% of your Levy payments.

How Does The Levy Work?

HMRC collect 0.5% of your payroll monthly
Funds collected are credited to your online ‘levy account’
Your credits are topped up by10% from the government
You recruit apprentices and/or ask your existing employees to undertake apprenticeship training
Then you find one or more approved training providers
You transfer your levy credits to the provider(s) to pay for the training

How does the levy work?

This is where the answers can widely differ depending on how in depth you want it, short answer; by training apprentices you claim your costs back. If you make sure that you train the right number of staff by using an approved apprenticeship training provider, completing relevant apprenticeship ‘frameworks’.

Through our services we can help you plan this effectively and with our implementation and management help we can make sure you not only recover your Levy costs, but draw down additional funding. Long answer; get in touch and we can discuss all the specifics of the Apprenticeship Levy that will affect your business and provide you with a detailed analysis of how to maximise your cost recovery through our free Skills Gap Analysis.