The Apprenticeship Levy is part of three changes in law aimed at increasing the number of Apprentices as part of the Government’s commitment to have three million Apprentices. As well as the Apprenticeship Levy the Government is also:
The Apprenticeship Levy aims to fund three million Apprentices in the UK by 2020. Any organisation with a payroll in excess of £3 million per year will be subject to a 0.5% levy on all staff costs over the £3m. The amount paid (monthly) will be transferred to a digital account controlled by the said employer. This fund is used for Apprenticeship training.
You are able to register and create an account via the digital apprenticeship service. After a few working days after the payment is confirmed and as a result the funds will appear in the digital account. You are then able to use your levy funds to pay for apprenticeship training and assessments. Furthermore all organisations will receive a £15,000 offset allowance, as well as a monthly top up of 10% from the SFA (Skills Funding Agency) as the levy funds appear in the account.
If the levy fund does not cover the full cost of the apprenticeship training then as a result, the government can provide the extra financial support. However the levy fund (including top ups) will expire after 24 months. As a result, any unused funds will roll over from one month to the next. The account works on an automatic first-in, first-out basis. As a result, this ensures that previous funds (inc. top ups) are used first to minimise expired funds.
For Instance, Employers of 250 employees, each with a gross salary of £20,000
Pay bill: 250 x £20,000 = £5,000,000
Levy sum: 0.5% x £5,000,000 = £25,000
Allowance: £25,000 – £15,000 = £10,000 annual levy payment
Government top up: £25000 + 10% = £27,500 total available to spend on training
If you don’t pay into the apprenticeship levy…
For Instance, Employers of 100 employees, each with a gross salary of £20,000.
Pay bill: 100 x £20,000 = £2,000,000
Levy sum: 0.5% x £2,000,000 = £10,000
Allowance: £10,000 – £15,000 = £0 annual levy payment