The Apprenticeship Levy – will this apply to your business?

Posted: 4th Apr 2017 by Clare Walker Payroll, Taxation

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 key points about the Apprenticeship Levy…

HM Revenue & Customs (HMRC) are introducing the apprenticeship levy on 6 April 2017.

The levy requires all employers operating in the UK, with a payroll of over £3 million each year, to invest in apprenticeships.

Only employers with an annual pay bill of over £3 million and connected companies and charities who have annual pay bills over this amount will be required to report and pay.

The levy will be charged at 0.5% of an employer’s annual pay bill but an annual levy allowance of £15,000 is available to each employer, or group of connected companies or charities, to offset against their liability.

Does the Apprenticeship Levy apply to you?

In January this year, HMRC contacted all employers it identified as ‘levy-paying employers’. If your annual pay bill exceeds £3 million (this is made up of the total amount of your employee

earnings that are subject to Class 1 National Insurance) and you haven’t heard from HMRC directly, you must contact them prior to processing your first payroll in the new tax year.

Steps for paying the Apprenticeship levy…

If your organisation is liable to pay you should prepare for the introduction of the levy.

You must make sure that your payroll software can make the necessary calculations and you must report and pay the amount due to HMRC.

Your apprenticeship levy must be reported on the Employer Payment Summary (EPS) within 14 days after the end of each tax month. This means the first apprenticeship levy report must be submitted no later 19 May 2017.

You should pay the levy at the same time as you submit your usual PAYE payment, by the 19th of the month (or 22nd if you pay electronically).

Steps for accessing funding…

The Skills Funding Agency (SFA) are now inviting all levy-paying employers to register on the new digital apprenticeship service, known as DAS, through which you can plan, manage and pay for your apprenticeships online.

Fewer than 2% of all employers will be liable to pay the apprenticeship levy in 2017/18, which leaves a lot of non-levy paying employers.

For these employers, the new service is not available but there will still be access to government support for apprenticeships through the National Apprenticeship Service.

For further information on this, please go to the following link: www.gov.uk/guidance/pay-apprenticeship-levy