Apprenticeship Levy for Employers
The Government is committed to achieving 3 million apprenticeship starts by summer 2020. In order to achieve this and increase the quality of apprenticeship training, the Government is putting control of funding in the hands of employers and from 6 April 2017 is introducing a levy on employers to fund new apprenticeships.
Legislation will be introduced in 2016 and will provide for a levy to be charged on employers’ paybills at a rate of 0.5%. The employer paybill will be based on total employee earnings subject to Class 1 secondary National Insurance Contributions. In the Autumn Statement 2014, the Government announced it would abolish employer Class 1 National Insurance Contributions for apprentices aged under 25 on earnings up to the weekly limit of £827 from 6th April 2016.
The levy applies to all UK employers; however, each employer will receive one allowance of £15,000 per tax year to offset against their levy payment. This means that only employers with a gross annual paybill in excess of £3 million will have to pay the levy.
The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance and the amount of levy funding that each employer can access will vary according to how much the employer pays in. Allocated funding will be held in employer accounts for two years and if the funding is not used, it will be redistributed to other employers. Levy funding will only be able to be spent on apprenticeship training and assessment for eligible individuals delivered through registered providers. In England, from April 2017, employers will have access to the Digital Apprenticeship Service to choose and pay for the apprenticeship training and assessment they want.