The Apprenticeship Levy

As you may have seen, the way the government funds apprenticeships is changing. Some employers will be required to contribute to a new Apprenticeship Levy from 6 April 2017, and there will be changes to the funding for apprenticeship training for all employers from 1 May 2017.

An employer whose earnings total (i.e the total amount of earnings on which the person is liable for secondary NICs in that tax year) exceeded £3 million in the previous tax year or is expected to exceed £3 million in a tax year commencing on or after 6 April 2017 must notify HMRC of the amount of its liability for the purpose of the levy.

The rate of the levy will be 0.5% of the earnings total for a tax year, although this is subject to an annual allowance of £15,000 which can be offset against the levy.  This means that the levy is 0.5% of earnings over £3 million in the relevant tax year.

The Apprenticeship Levy will be payable by employers through PAYE, alongside income tax and NICs. Employment intermediaries that are required to account for tax and NICs on the payments they make to workers that they supply to clients that exceed the £3 million earnings total will also be subject to the levy.

Online apprenticeship service

Large employers are being encouraged to register in advance for the online apprenticeship service. The apprenticeship service is an online digital system (similar to online banking) that has been set up to support the apprenticeship levy.

The online service allows employers to financially manage their apprenticeship programme and help them to estimate their financial spend and recruit apprentices through their training providers.

What happens to employers who are not required to pay the levy?

We understand that employers who are not required to contribute to the levy, and those who want to invest more in training than they have available in their digital accounts, will benefit from government funding to support apprenticeships.

Employers will be asked to make a 10% contribution to the cost of this training and the government will pay the rest, up to the maximum amount of government funding available for that apprenticeship. Initially employers will need to pay their share directly to training providers. Although, over time it is intended that this will be moved to the online system.

Whether your business will be required to contribute to the Apprenticeship Levy or not, being aware of the impending changes and how they could affect your business or business relationships in your sector is paramount.

 

Disclaimer: This bulletin is for general guidance purposes only and should not be used for any other purpose. This article is written by Brabners and reproduced with their permission. Brabners is a Limited Liability Partnership.

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