In April 2017 the Government implemented the apprenticeship levy, a mandatory employer tax that contributes to apprenticeship development. Yet not all employers need to pay this tax. The apprenticeship levy is only paid by organisations with a pay bill of over £3 million each year (regardless of whether they employ any apprentices).
As you pay the levy you add to your organisation’s apprenticeship service account. You can then use the funds in this account to contribute towards the costs of training and assessing your apprentices.
If you are a non-levy paying organisation you can still claim support via the Government’s “co-investment” scheme. Under this scheme your organisation will pay 5% of the maximum funding band towards the cost of apprenticeship training. The government will then pay the remaining 95%. If the cost of training and assessment exceeds the funding band, you will need to cover these costs from your own budget.
The apprenticeship levy only applies to English apprenticeships and can only pay for learners who complete at least 50% of their work in England.
Each apprenticeship standard comes under a different funding band. These funding bands outline the largest amount that an employer can claim back for any given apprenticeship. To view an up-to-date list of standards and funding band amounts please visit the Institute for Apprenticeships & Technical Education (IfATE).
You can only use levy funds up to the maximum funding band amount to pay for a learner’s training and their assessment. Again, if these costs exceed the available funding then your business must pay the excess. You cannot use the levy to cover costs incurred as a result of hiring an apprentice (e.g. wages, equipment, expenses).
our business must pay the apprenticeship levy monthly via PAYE. This is the same way that your organisation pays Income Tax and/or National Insurance contributions. These payments are a deductible expense for Corporation Tax. At the start of each month your organisation needs to notify HMRC of the levy value you need to pay for that month. As you make payments available funds will show in your account on the 23rd of each month.