What is the Apprenticeship Levy and how will it be paid?
The Apprenticeship Levy is tax set as part of the government’s plan to increase the quality and quantity of Apprenticeships. It is designed to encourage employers to take on apprentices as a way of meeting their current and future skills needs. The Government has a goal of starting 3 million new apprentices by 2020.
As of April 2017, businesses who have a salary and wage bill of over £3 million will be legally required to pay the Apprenticeship Levy. The amount each business will have to pay will differ dependent on the exact amount of their salary and wage bill. The Levy amount is worked out as 0.5% of the salary and wage bill minus an allowance of £15,000. Payments for the Levy will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE). Here are two examples of how much money will be paid into the Digital Apprenticeship Service Account:
Business 1 has a payroll of £6 million. 0.5% of their salary and wage bill is £30,000, minus the Levy allowance of £15,000, this leaves £15,000. This means Business 1 is only required to pay £15,000 over the course of a year in monthly installments.
Business 2 have a payroll of £4.5 million. 0.5% of their salary and wage bill is £22,500, minus the Ley allowance of £15,000 this leaves £7,500. This means Business 2 is only required to pay £7,500 over the course of a year in monthly installments.
What happens once the money has been paid and how can you draw down from the Levy?
The money will be collected by HMRC and can be accessed via a new online Digital Apprenticeship Service (DAS) account. You will be able to register for your DAS account as of this month (January 2017).
Working with Yorkshire Apprentice we will guide employers through the process of identifying apprentice training opportunities and supporting you with any apprentice recruitment needs. Finding the right candidate is critical in the success of apprenticeships. Both the candidate and the employer need to be matched and the right programme started.
Once we have found a candidate, these details will be registered on DAS. A form of voucher will be shown to you to show how much you can draw down for your apprentice. As of May 2017, you will be able to spend the money in your online account on apprenticeship training.
Please note that these details are for businesses based in England only. Details are yet to be confirmed about access to levy funds outside of England.