Calculating the apprenticeship levy as at 18th March 2016

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Calculating the Apprenticeship Levy
18-03-2016
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)

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See our company page: https://www.linkedin.com/company/pathwaygroup
What we know about the levy?
Levy mostly affects large employers from April 2017
• Affects employers with a turnover 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 (250 employees +) 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

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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

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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

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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 approximately 18-24
months to use their levy voucher (tbc)
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