In May 2017, the government changed the way apprenticeships were funded and introduced the Apprenticeship Levy – a new tax that funds apprenticeship training. Although the levy is aimed at large business, all were affected by this change.

Levy paying businesses
All businesses with a wage bill of £3million or above are classed as levy paying businesses and will:
• Be charged at 0.5% of their wage bill including all earnings that are subject to class 1 National Insurance contributions.
• Be allocated a £15,000 Levy Allowance, so the business will pay 0.5% of their wage bill minus £15,000.
• Have a 10% top-up to the fund deposited into your apprenticeship service account by the government.
• Be offered an incentive payment of £1,000 for employing an apprentice aged 16-18.
• Pay the levy directly to HMRC through the PAYE process. Funds will be credited into the Digital Apprenticeship Scheme (DAS).
• From April 2018, levy-paying employers will be allowed to transfer funds to other employers, through the apprenticeship service. Transfers can be made to any employer, including smaller employers in their supply chain, and apprenticeship training agencies. Levy-paying employers will initially be able to transfer up to 10% of the annual value of funds entering their apprenticeship service account.

Non-paying businesses
All businesses with a wage bill under £3million are classed as non-paying levy businesses and will:
• Be required to pay 10% towards the cost of training, the government will pay the remaining 90%.
• Be offered an incentive payment of £1,000 for employing an apprentice aged 16-18. If you have less than 50 employees then you may qualify for fully funded apprentices (for those you employ aged 16-18).

Our specialist Business Development team can help you understand the Apprenticeship Levy and maximise your return on investment. Call 01226 216 166 or email for more information or to arrange an appointment.

Last updated: 2nd May 2018