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Get ready for the apprenticeship levy

April 5, 2017 at 9:00 AM

It could be the biggest change to way young people are trained for decades. But how businesses plan to put the upcoming payroll tax to use has yet to be seen.

Get ready for the apprenticeship levy

From 6 April 2017, all UK employers with an annual payroll bill of more than £3 million will have to pay 0.5 per cent of it in the form of an apprenticeship levy - even if they don’t plan to take on an apprentice. Not all companies are ready – according to City & Guilds, around a third of companies liable to pay it were still unaware it existed.

Employers will have an annual allowance of £15,000, which will be offset against the levy. In effect, only employers with a annual payroll of more than £3 million will be liable to pay the levy (because 0.5% of £3 million is £15,000). Employers who are part of a group structure will have one £15,000 allowance to share between the group. The levy will be paid through PAYE each month and any unused allowance can be carried forward to the next month.

The new digital apprenticeship service will distribute the funds raised by the levy for employers to use on apprenticeship training and assessment in England. Separate arrangements for funding apprenticeships apply in Scotland, Wales and Northern Ireland. The Government has published guidance for employers on how the apprenticeship levy and the new funding system will work.


About the Author

Philip McCabe Photo

Philip McCabe is an experienced employment lawyer who has been advising businesses and individuals on a wide range of employment and HR issues since 2000.

He is a member of the Employment Lawyers Association, Industrial Law Society, and Law Society. He regularly writes for national publications on employment law issues and is a regular columnist in the Derbyshire Times.

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