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The apprenticeship levy explained

The apprenticeship levy, which came into force last month, has been met with confusion by many companies across England.

Research carried out by training organisation City & Guilds revealed that one third of the employers surveyed were unaware of the levy and many didn’t understand how it will work.

What is the apprenticeship levy?

Announced by UK Government last year, the apprenticeship levy aims to raise £3b each year in order to meet the target of funding three million apprentices by the year 2020.

Who has to pay the levy?

Aimed at larger businesses, the apprenticeship levy applies to those employers in England whose annual pay bill is above £3m.

How is the levy calculated?

The levy is 0.5 per cent of the company’s annual pay bill, however employers will receive £15,000 from the Government to offset against the levy.

How do you pay the levy?

First payments will be taken in May 2017. The levy will be collected monthly by HM Revenue and Customs through existing Pay as You Earn (PAYE) systems in order to make the administration process as straightforward as possible.

What will you get for your money?

Designed to encourage the support of apprenticeships, companies will be able to claim back their levy contributions in the form of digital vouchers, which are then used to fund training apprenticeships. Any digital vouchers left unspent will expire after 24 months – a final incentive to use the funds for apprenticeship training.

The levy has led to a growing number of businesses embracing the benefits of apprentices. But what are your legal obligations as an employer?

Read our Top Ten Employment Tips For Businesses Taking On Apprentices

If you require further guidance on the Apprenticeship Levy or the hiring and management of apprentices, please do not hesitate to contact Alan Lewis of our Employment Department on 0161 837 6807, or email us on enquiries@lindermyers.co.uk

Find out more about our Employment department
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