The Apprenticeship Levy is a financial contribution made by employers to fund and support apprenticeships to assist the UK in economic growth. The levy will be introduced from April 2017 and will be collected by HMRC via PAYE as a hypothecated tax. The levy amount will be kept in the company’s digital levy fund, which can only be used to purchase Apprenticeship training.
The levy will affect employers in all sectors and will only be paid on annual paybills (wages) in excess of £3 million. The levy will be charged at a rate of 0.5% of an employer’s paybill of amounts over £3 million. All employers will receive an allowance of £15,000 to offset against paybills up to £3 million. This means that less than 2% of UK employers will actually pay a levy.
Where companies pay a levy, the Government will contribute an additional 10% top-up to support employers to access more apprenticeships for their business. The levy and top-up will be kept in the company’s digital account to be used to pay for apprentices training which is offered by approved Apprenticeship training providers such as SFX.