BUSINESS
APPRENTICESHIP LEVY LOWDOWN
Paul Nixon
ANNOUNCED IN THE 2015 BUDGET , THE APPRENTICESHIP LEVY WILL BE INTRODUCED IN APRIL 2017 , SO NOW IS THE TIME FOR BUSINESSES TO BEGIN PLANNING AHEAD FOR THE NEW SYSTEM . IF THE LEVY APPLIES TO YOU , THEN YOU ’ LL NOT ONLY NEED TO FACTOR IN THE NEED TO PAY IT , BUT ALSO EXPLORING THE POTENTIAL OPPORTUNITIES ARISING FROM THE NEW EMPHASIS ON APPRENTICESHIPS AND PRODUCTIVITY .
What is the Apprenticeship Levy ?
It is a new charge from which the government hopes to raise £ 3bn by 2020 , as a way of helping to create 3 million new apprenticeships before the next election .
The Levy will be charged at 0.5 % of payroll , but thanks to an allowance of £ 15,000 which is ofset against that payment , only firms with a payroll of £ 3m or more will actually have to pay . In fact , when we look closely at those figures , it translates to barely 2 % of employers across the UK .
Following a consultation last year , guidance on how the new system will work has been coming in stages – and more is promised between now and next year .
How is it calculated ?
The Levy will be calculated on a business ’ pay bill , which is defined as the total amount of earnings that are subject to Class 1 secondary National Insurance Contributions ( NICs ) and earnings below the secondary threshold will also be included . Businesses will have to calculate the amount they owe and pay it each month to HMRC through the normal PAYE system alongside income tax and NICs .
How can businesses benefit from the Levy ?
A new Digital Apprenticeship Service ( DAS ) is being set up which will offer an online portal where firms can manage their account , search for and access apprenticeship services and the government plans to have the system up and running in advance of the first payments being made . Larger businesses will be able to operate different accounts for different PAYE schemes if they wish .
If there are any funds held in accounts , then to begin with , the government will apply a 10 % topup to those funds and businesses should also note that money in the account has an 18-month use-it-or-lose-it shelf life .
What should businesses be doing now to prepare ?
Firstly , those that will be at or over the £ 3m payroll limit will need to ensure that the Levy has been factored in to financial or commercial plans for next year and beyond . The government promise a simply and user-friendly system , but it would be worth checking that the payroll team are on the ball early .
The introduction of the Levy and the apprenticeship system that will go with it is an ideal opportunity for businesses to review their existing training and apprenticeship programmes . There will be money available in the new accounts so it makes sense for firms to think carefully about how they plan to make the most of it . The system will provide information about approved apprenticeships and enable firms to access and pay for them directly , but you will not be able to use the new system to finance any training or apprenticeships started before April 2017 .
It is worth noting that the Levy will apply equally across the UK , but the DAS will only operate in England . Apprenticeships are a devolved responsibility , so the administrations in Scotland , Wales and Northern Ireland will be making their own arrangements .
The start date is not far away . What ’ s more there are still plenty of details still to come about how it will be structured and operate , as the government will be publishing three more rounds of detailed guidance in June , October and December .
Wilkins Kennedy can help . If you would like to know more about how the Apprenticeship Levy will affect your business in 2017 , email Partner , Paul Nixon , at paul . nixon @ wilkinskennedy . com or call on 01233 629255 .
www . wilkinskennedy . com
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