Jun 2ND

Apprenticeship levy – will it affect you?

There are still many unanswered questions about the new apprenticeship levy but Moulton Apprenticeship Team are keeping up to date with developments and have summarised the current information in the article below.

What is the apprenticeship levy?

In April 2017 the way the government funds apprenticeships in England will change. There will be a new apprenticeship levy introduced for all large employers (whether they run an apprenticeship scheme or not) but all the funds raised from this new levy will be available for reinvestment in apprenticeship training.

If you have a pay bill of more than £3 million from April 2017 you will be charged at a rate of 0.5% of your pay bill and this will be collected by HMRC through the PAYE process. There will be an allowance of £15,000 offset against the levy which effectively means that you will only be paying for the portion of your pay bill that is in excess of £3 million. The levy calculation will be based on the total amount of earnings subject to Class 1 secondary National Insurance Contributions (NICs) and will be applicable to all sectors even if there are existing established levy systems in place.

How can I get my levy payments back?

The levy payments will available to reinvest into new apprenticeships through a digital apprenticeship service account. These funds can only be used to fund training and assessment on an approved apprenticeship framework or standard; levy funds cannot pay for apprentices’ wages, travel or subsidiary costs, managerial costs, work placements, traineeships, or the costs of setting up an apprenticeship programme.

What is the digital apprenticeship account – do I need to do anything?

As a levy paying employer you will need to register and create a digital account from January 2017. Your levy payments will appear in your digital account a few days after you have confirmed your pay bill and levy contribution to HRMC for the previous month so you should see the first available funds in your account in late May 2017. The government will apply a 10% top-up to the funding available in your digital account so for every £1 paid in levy you will have £1.10 to spend in England on apprenticeship training. Funds will remain in your digital account for 18 months after which they will expire unless they are spent on apprenticeship training. You will need sufficient funds in your digital account each month to cover any agreed apprentices you have in training and any shortfall will need to be made directly to your apprenticeship training provider so it will be essential that you plan your apprenticeship training carefully to maximise the benefit that can be gained from your levy payments.

There is current consideration being given to allowing levy funds to be shared between employers (for example to train an apprentice in a supply chain) and further details will be given in June if this approach is to be allowed. However group structure employers will be able to register multiple PAYE schemes into a single digital account to use the fund to train apprentices across the group.

What should I be doing to prepare for the levy?

Although full information on the impact of the levy may not be known until the autumn, Moulton College apprenticeship team are watching levy and funding development carefully and are available to discuss how these changes will impact on your business.

If you would like the college to support you understand the levy payments and the opportunity that this could create to introduce an exciting and innovative future apprenticeship provision within your business please contact the Apprenticeship Programme Leader, Georgina Burton, for more information (georgina.burton@moulton.ac.uk).