Apprenticeship Levy 2017
The Apprenticeship Levy comes into force on 6 April 2017. Employers with an annual pay bill over £3 million are liable to pay the levy each month. If last year’s pay bill exceeded £3 million or if this year’s pay bill is forecasted to exceed £3 million, employers must calculate how much levy is due and report this to HMRC each month.
The total amount of levy due in the year will be 0.5% of the amount by which the pay bill exceeds £3 million. The levy is paid each month to HMRC through the PAYE process. Employers must report to HMRC using their EPS.
Funding for apprenticeships is available to all employers whether they are liable to pay the levy or not. Funding will be available from 1st May 2017. Apprenticeship programmes that started before 1st May 2017 will continue to be funded as they were before.
Levy-paying employers will receive levy credit each month. The amount of levy credit received each month will be equal to: the monthly levy paid, multiplied by the % of employees living in England, plus a 10% top-up from the government. These funds will expire after 2 years if they are not used for apprenticeship training. Levy-paying employers will register and use the Digital Apprentice Service (DAS) to manage their account online.
If the levy credit does not cover the costs of the training in a particular month, or if the employer is not liable to pay the levy, the government will share the cost through co-investment. Each type of apprenticeship is put under one of 15 government funding bands. These bands have a maximum amount that caps the amount of funds that can be spent on apprenticeship training. The government contributes 90% of this band maximum towards training costs and the employer must contribute the other 10% of the band maximum. Any additional costs beyond the band maximum must be paid by the employer.
Employers can only spend these funds on apprenticeships in England. Funds should be used for paying training providers and assessment organisations and cannot be used to pay for apprentices’ salaries. Employers must only use government approved training providers and assessment organisations.