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Levy Paying Businesses

In spring 2017 the way the government funds apprenticeships in England changed. Some employers are now required to contribute to a new apprenticeship levy, and there has been changes to the funding for apprenticeship training for all employers in England. See below for further information for levy paying employers.

  • From 5th April 2017, employers with a paybill over £3m will be charged a levy of 0.5% of their paybill.
  • “Paybill” will be based on total employee earnings subject to Class 1 secondary NICs.
  • The 0.5% levy is on your full UK payroll bill, not just the amount over £3m.
  • The levy will be payable through Pay As You Earn (PAYE) alongside income tax and National Insurance.
  • Payment will be taken monthly, in real time, meaning as your paybill changes each month, the levy amount taken will be reflected.
  • HMRC will work closely with employers and providers of payroll services to minimise the burden of implementing these changes.
  • Although the levy is calculated based on your full UK paybill, employers will only be able to only spend their English proportion on English apprenticeship training.
  • The levy payment will then be ring-fenced in the form of an electronic voucher that can be used to purchase apprenticeship training, assessment and testing from recognised providers, from May 1st 2017 onwards.
  • Funding caps for apprenticeships will be between £1,500 and £27,000.
  • Un-used vouchers will expire on a first in, first out basis after 24 months.
  • The government will apply a 10% top-up to monthly funds i.e. all funds entering a levy payer’s account will be increased, so every £1 will be increased to £1.10 in value.
  • Additional financial incentives are available for employing 16 – 18 year olds.
  • Based on proposed funding rules, the levy can be used to fund existing employee development as long as they meet the criteria set out.
  • The Government will co-invest 90% towards apprenticeships, if you have not got enough in your digital account. You will have to pay the remaining 10%.

For more information and to find out how we can help you, call us on 01422 24 19 64

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