FAQs about the Apprenticeship Levy

Hannah Williamson

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22 Jul 2020

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The apprenticeship levy is a government initiative that came into force in 2017.

Our team of employment advisers receive a significant number of calls on this topic every year. So, we’ve compiled a list of frequently asked questions to help you get back to business.

For any further information or advice on what the Apprenticeship Levy is, how it could affect you, or any other advice, please call our employment advisers on 01455 858 132.

FAQs

Who has to pay the levy?

Employers in any sector operating in the UK with an annual pay bill of more than £3 million, regardless of whether they already pay into an existing industry levy scheme.

What makes up the pay bill?

Wages, bonuses, commissions, and pension contributions that are paid on NICs. Benefits in kind are not included.

How is it paid?

You will calculate, report and pay the levy to HMRC, through the PAYE process alongside tax and NICs.

How much do I have to pay?

0.5% of your annual pay bill, minus an allowance of £15,000. The Government will then add a further 10% of what is in your account.

What if I am part of a group of companies?

Each company within the group must pay the levy if they meet the wage bill criteria. Only one £15,000 allowance can be applied across the group however.

Where will my money be kept?

In a digital apprenticeship service account. If you want to take on apprentices, you will use this money to buy the training and assessment part of the apprenticeship. The funds will expire after 2 years.

How will I find apprentices?

Through the Digital Apprentice Service that can be found on the government website.

You’ll be able to choose the apprenticeship framework, training provider, assessment organisation and post apprenticeship vacancies.

Can I spread my funds around?

You can transfer up to 10% of your annual apprenticeship funds to another organisation to pay for apprentice training within that organisation. The organisation who receives the funds can be any organisation. That includes those within the same supply chain, industry or locality.

You can transfer any unused funds within their account to one other employer. However, it’s anticipated that the number of employers you can transfer funds to will be increased in the future.

In April 2019, legislation was updated to allow you to be able to transfer 25% of your levy funds to organisations within your supply chain.

What if I don't have enough funds in my account to pay for the apprenticeship?

New funds should enter your account every month for as long as you pay the levy. The costs are spread over the full length of the apprenticeship and are met in monthly installments. Only funds that are not spent after 24 months will expire - this is to help reduce the chance of funds expiring.

However,  If you really don't have the funds to cover the monthly cost the Government will pay 90% of the balance due.

Summary

The levy affects employers in all sectors, so don’t assume you’re exempt. Here are the key points you need to take away:

  • Calculate your wage bill to see if you meet the criteria. Those in a group structure will need to individually assess themselves against the criteria and the allowance
  • The funds in the digital account are to pay for the training and assessment of apprentices, not for their wages
  • You will have to pay the levy regardless of whether you currently have any apprentices, or whether you intend to take any apprentices on.

Expert support

If you have questions that haven’t been answered in this article, you want additional information or need further support, speak to a Croner expert today on 01455 858 132.

About the Author

Hannah Williamson is a CIPD Qualified HR professional with over 10 years’ experience in generalist HR management working within the Manufacturing Industry.

Working for a Global manufacturer provided Hannah with the opportunity to work in America and across Europe supporting HR functions and the wider business.

Hannah is Croner’s Advice Manager, taking responsibility for overseeing the provision of advice to all Croner clients, bringing together our Corporate, Simplify and Association service provisions.

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