The way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be 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 will see 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
This guidance provides information on how the apprenticeship levy will work, from when it is introduced in April 2017. It also explains the principles that apprenticeship funding will operate on from 1 May 2017, whether you pay the levy or not.
You can find out more about the benefits apprenticeships can bring to your organisation and about the ways apprenticeships are being reformed, in the vision for apprenticeships. The reforms include giving employers the opportunity to add to the new apprenticeship standards already available by developing standards that meet their precise needs.
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