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# Calculating the apprenticeship levy and non levy

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Calculating the apprenticeship levy and non levy for employers

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Safaraz Ali
Safaraz@pathwaygroup.co.uk

Published in: Education
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### Calculating the apprenticeship levy and non levy

1. 1. APPRENTICESHIP REFORMS A Quick Guide for Employers 04-01-2018
2. 2. CALCULATING THE APPRENTICESHIP LEVY How it works and how to calculate it if you’re a large employer Safaraz Ali @SafarazAli https://uk.linkedin.com/in/safaraz (E&OE)
3. 3. WHAT WE KNOW ABOUT THE LEVY? Levy mostly affected large employers from April 2017 • Affects employers with a pay role of £3m + across all sectors with a compulsory 0.5% of payroll goes to a levy pot with a £15,000 offset • Introduced to drive up the need for quality apprenticeships • Money used for apprenticeship only supporting new or existing employees • Paid through PAYE • Accessed by large employers (pay role of £3m+) with leftovers to small businesses • Employers receive £15,000 offset against payment of levy • No NI payments for under employees who came through apprenticeships with under £824 payment • Employers will be given 24 months from April 2017 to use the levy. If they don’t use it in that time, it will be given to other employers to use.
4. 4. CALCULATING THE LEVY Assuming you’re a large employer with 300 employees on a £20,000 annual gross salary Payroll: 300 x £20,000 = £6,000,000 Levy: 0.5% x £6,000,000 = £30,000 Levy Allowance: £30,000 - £15,000 = £15,000. £15,000 is the levy amount payment annually 10% top up by the Government = £15,000 + £1,500 giving £16,500 to spend on Apprenticeships
5. 5. CALCULATING THE LEVY Assuming you’re a large employer with 100 employees on a £20,000 annual gross salary Payroll: 100 x £20,000 = £2,000,000 Levy: 0.5% x £2,000,000 = £10,000 Levy Allowance: £10,000 - £15,000 = £0 payable. No levy payment due as the levy allowance amount is less than Limit allowed
6. 6. SOME TERMS AND CONDITIONS If you are part of a group of companies, each company is treated separately when calculating the levy unless they’re all on one payroll • Those employers paying the levy have months to use their levy voucher For employers who currently receive grants, they can pay the voucher to themselves based on how they choose to deliver • If they are provider & employer, they need to update SFA with ILR monthly to prove they’re paying for each apprenticeship • This can also be managed through registered providers
7. 7. ELIGIBILITY • Unlike the old Apprenticeship funding system, under the Apprenticeship Levy, there are no barriers to eligibility based on the qualifications of a potential candidate. • Employers can utilise apprenticeship training, whether they’re taking on new entry-level staff, or seeking to upskill their existing staff. • Candidates with degree level qualifications that were previously ineligible for an Apprenticeship are now eligible under the new funding rules.
8. 8. NON LEVY EMPLOYERS
9. 9. NON LEVY EMPLOYERS As a non-Levy payer, you will have an annual pay bill of under £3 million
10. 10. NON LEVY Funding bands and co-investment • Every individual Apprenticeship framework and standard is allocated to a funding band. The upper limit of the funding band will cap the maximum price that government will ‘co-invest’ towards an Apprenticeship. • The government will fund 90% of the agreed price for training and assessment, and you as the employer will pay 10% + VAT. • employers will need to pay their co-investment share directly to training providers • You will be able to pay in instalments over the lifetime of the Apprenticeship; contact Pathway for more information on how you can spread the cost.
11. 11. SMALL EMPLOYER INCENTIVE • The government recognised that smaller employers have historically played a very important role in helping young and disadvantaged people into the workforce for the first time. • Grant to small employers to support them in taking on new apprentices aged between 16 and 18 years of age are available. This is called the Apprenticeship Grant for Employers 16-18 and is for £1000 paid in instalments. • Support is available for small employers employing fewer than 50 workers to take on younger apprentices; the government will pay 100% of the Apprenticeship training costs for these individuals. In addition to this, they are extending this offer to small employers who take on a 19 to 24 year old apprentice who was formerly in care or has a Local Authority Education, Health and Care plan. • Regional Grant may also be available and Pathway can assist with this information.