The Apprentice Levy Scheme was introduced in April 2017 and has the aim of creating some three million new apprentices by 2020. It does this by requiring businesses paying more than £3 million a year in annual wages to spend at least 0.5% of that bill on the levy. So, does this affect your business and how do you pay it?
Paying the levy
The Levy started in April with the first payments due in May 2017. The system means that businesses need to inform HMRC each month if they are eligible under the scheme to pay the levy and once they have done this, it is paid directly through the PAYE system.
Accessing the system
Once a business starts to pay the levy and is registered with HM Revenue & Customs, they then get access to funding using the ‘digital apprenticeship service account.’ This allows the business to select and pay for government-approved training as well as to post vacancies for apprentices. The government approved training simply means that the training provider has passed quality and financial tests set by the government to guarantee standards.
Calculating your payment
To work out if your business needs to pay the levy and register with HMRC, you need to work out your total wage bill. This includes any pension payments and bonuses paid. If this exceeds the £3 million threshold, then you need to calculate 0.5% and put this to one side to make the payment. All employers will receive an allowance of £15,000 to offset against this payment.
The government is automatically adding 10% to the funds in the apprenticeship service account. (These funds will expire after 24 months in the account).
If your pay bill is under £3 million then you will need to wait until at least 2018 for the scheme to be expanded.
Lack of understanding
The biggest problem at the moment is that many businesses don’t realise they need to pay the levy or the benefits that it can bring to them. A survey by the British Chamber of Commerce showed that 40% of businesses have no idea about the levy or don’t understand how it works. This means that businesses could be missing out on the chance to have training and an apprentice that receives some funding from the government.
Cintra Payroll has been working as payroll providers for over 40 years. If you would like to find out more, fill out a contact form and we will be in touch.