As we have previously advised, large employers will be required to pay an apprenticeship levy from April 2017 based on the level of their annual wage bill. The levy will be placed into each employer’s own levy account which can subsequently be drawn on to pay for costs incurred in the off the job training required as part of an apprenticeship. The reason for this is the Government’s target of creating a further 3 million apprenticeships by 2020 and its decision that employers are to fund the majority of this.
The Government recently announced, in March’s Budget, that employers’ individual levy contributions will be boosted by a further 10% of Government contribution, therefore allowing employers to fund even more apprentices in their organisation.
The current detail available on calculating the contents of an employer’s apprenticeship levy account is as follows:
Step 1: Calculate your annual wage bill (including bonuses and commission paid)
Step 2: Calculate 0.5% of annual wage bill
Step 3: Deduct £15,000 from figure arrived at in Step 2 (if this results in £0 or less, no levy is payable)
Step 4: Calculate 10% of the sum arrived at in Step 3
Step 5: Add sum arrived at in Step 3 to sum arrived at in Step 4
Step 1: Annual wage bill is £5 million
Step 2: 0.5% of £5,000,000 = £25,000
Step 3: £25,000 – £15,000 = £10,000. This is the annual levy payable by employer
Step 4: 10% of £10,000 = £1000
Step 5: £10,000 + £1000 = £11,000 per year to spend on off the job apprenticeship training.
There are still more details to be ironed out by the Government. Currently, although all employers in the UK who meet the annual wage bill criteria must pay the levy, it is only certain that those in England will be able to access their funds to pay for apprenticeship costs. Only employers in England will receive the 10% top up.