The Apprenticeship Levy will bring England into line with other modern economies, where the co-funding of apprenticeships by the interested parties – employer and Government – is already the standard model.
The Apprenticeship Levy will directly fund Apprenticeship training programmes, with the aim of increasing the number of people in apprenticeships to 3 million by 2020. It will mean employers can take control and benefit from a further £3bn that will be added to the Apprenticeship pot over the course of the next five years.
With the new levy coming into effect in April 2017, here is what you and your organisation need to know:
The apprenticeship levy requires all employers operating in the UK, with a pay bill over £3 million each year, to make an investment by training apprentices.
You will pay the levy on your entire pay bill at a rate of 0.5%. However, you will have a levy allowance to offset against this. The levy allowance is worth £15,000 for each tax year. This means the levy is only payable on pay bills over £3 million (because 0.5% x £3million = £15,000).
|Levy Payment Example||Levy Paying Employer||Non-Levy Paying Employer|
|Number of employees||250||100|
|Average gross salary per employee||£20,000||£20,000|
|Pay bill (number of employees’ x average gross salary per employee)||250 x £20,000 = £5,000,000||100 x £20,000 = £2,000,000|
|Levy sum (0.5% x pay bill)||£25,000||£0|
|Less levy allowance of £15,000||-£15,000||NA|
|Levy payment by employer||£10,000||£0|
The opportunity to reclaim your levy costs is one not to be missed and so long as you are offering recognised apprenticeship training you can take advantage of the offer. It comes with the promise that you could get more out than you put in. An e-voucher system will ensure that the funding process is not open to abuse, so you can be sure that the money you pay as a result of the levy, will benefit organisations committed to apprenticeships.
We will be supporting employers to maximise their return on investment of the levy. With our dedicated Apprenticeship Recruitment team, Derby College can provide you and your organisation with the expertise and support to guide you effortlessly through the new system, we offer;
PDF Download - gov.uk Apprenticeship Funding (inc Levy) Q&A
Web Page - gov.uk - Guidance - Apprenticeship levy: how it will work
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