The way the government funds apprenticeships in England has changed. Some employers are now required to contribute to the apprenticeship levy, while there have also been changes to the funding for apprenticeship training for all employers. The levy on employers is part of a broader programme of reforms and apprenticeship starts from April 2017.
The levy sees all employers with a pay bill over £3 million each year paying the levy to HMRC at 0.5% of the total annual pay bill, with an allowance of £15,000 to off-set against the levy payable.
To begin maximising the levy, employers must register with the Digital Apprenticeship Service (DAS). There are five easy steps to get you started.
HRC has identified five key points both levy paying and non-levy paying employers need to know regarding the new apprenticeship funding. You can find out more here.
All businesses, levy payers or not, that take on an apprentice who is under 19 on the start date of the apprenticeship programme will receive an incentive payment. The first part of £500 is payable when the apprentice has completed 3 months in learning and the second part of £500 is payable once 12 months are completed.
At HRC we are committed to supporting employers through these changes and to show the tangible benefits apprentices can make to a business. Contact us to see how you can ensure your business maximises the benefits of your levy pot.
Apprenticeship Levy calculator
To help estimate your apprenticeship funding, the Skills Funding Agency has created this helpful tool.
Here are someworked examples of how the levy is calculated;
A. Employer of 250 employees, each with a gross salary of £20,000
Wage bill: 250 x £20,000 – £5,000,000
Levy Sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual levy payment
B. Employer of 150 employees, each with a gross salary of £20,000
Wage bill: 150 x £20,000 – £3,000,000
Levy Sum: 0.5% x £3,000,000 = £15,000
Allowance: £15,000 – £15,000 = £0 annual levy payment
C. Employer of 100 employees, each with a gross salary of £20,000
Wage bill: 100 x £20,000 – £2,000,000
Levy Sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual levy payment