Calculating the apprenticeship levy

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The document discusses the UK apprenticeship levy that will affect large employers starting in April 2017. It provides details on how the levy is calculated, including that employers with an annual payroll over £3 million will pay 0.5% of their total payroll. It also gives examples of how the levy would be calculated for employers with 300 employees and 100 employees. The document notes that employers will receive a £15,000 allowance to offset their levy payments.

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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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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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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

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