The document outlines the apprenticeship levy introduced in April 2017, requiring UK employers with an annual pay bill over £3 million to pay 0.5% of their payroll as a tax to fund apprenticeships. The government aims to increase apprenticeship starts to 3 million by summer 2020, enhancing workforce skills through an additional £3 billion a year. Employers benefit from a £15,000 allowance and a 10% top-up on their contributions to support training costs, utilizing funds through a digital apprenticeship services account.

1. THE APPRENTICESHIP LEVY
Understanding the Changes

2. A guide to help employers understand the
basics of the apprenticeship levy, and how the
new funding changes will take effect.

3. The Government’s Goal
The apprenticeship programme first launched in 2010, and
has already given a remarkable 2.9 million people the chance
to learn new skills, and progress on to paid employment. This
has also helped boost UK business.
With such productive benefits on the horizon, the
government is now committed to achieving 3 million
apprenticeship start-ups by summer 2020.

4. What is the Apprenticeship Levy?
Scheduled to come into effect from April 2017, the obligatory
apprenticeship levy applies to all UK employers. Businesses with
an annual pay bill in excess of £3 million, will be required to
contribute 0.5% of their bill, as an additional tax through PAYE.
An allowance of £15,000 against the levy is available to each
employer. To reiterate, those with a pay bill of less than £3
million, will in fact pay nothing.

5. How Will the Levy Meet the
Government’s Goal?
This proposed levy is the government’s logical solution to funding
the desired increase in numbers of apprentices, and improving
the overall quality of training programmes. The ultimate aim is to
raise an additional £3 billion a year, which will be dedicated to
raising the skill levels within the UK workforce.

6. How the Levy will Work
 Employers will need to ensure that the necessary systems and
processes are in place to remit the levy, as well as access funds for
approved apprenticeship training- through the Digital Apprenticeship
Services account (DAS).
 0.5% levy is collected by the HMRC from employers with a pay bill of
£3m+ (minus the £15,000 allowance). This is via the Real Time
Information System, alongside Income Tax and National Insurance
Contributions.
 Employers draw down the levy through the DAS, in the form of
electronic digital vouchers. The vouchers will expire 18 months after
entering the account and as they are ring-fenced, they can only be
used for government published apprenticeship standards.

7. How the Levy will Work cont’d
 Employers will browse through an extensive online database of accredited
training providers and send a ‘voucher code’ to the one of their choice.
The provider will reclaim the value of the voucher from the government.
Employers are able to select more than one training provider, and are free
to spend their funding on apprenticeship training which they feel best
meet their needs.
 Funding bands will be set which will limit the amount of levy funds an
employer can spend on training an individual apprentice. The band will
vary according to the level and type of apprenticeship. To help cover any
additional costs, the government has also announced that employers will
receive a 10% top up on their monthly payments for the financial year of
2017/18. This means that companies will be able to ‘draw more than they
put in’.

8. The 10% Top-Up
To quote the Treasury: ‘From April 2017, employers will receive a 10 per cent
top-up to their monthly levy contributions in England and this will be available
for them to spend on apprenticeship training through their digital account’.
This new measure will come in addition to the £15,000 allowance that will also
be available to levy-payers.
The government will apply this very useful 10% top-up to the funds entering the
accounts of apprenticeship levy payers. This is expected to take place on a
monthly basis.
EXAMPLE: If an employer pays a £1,000 levy, then the amount in its levy pot will
actually be £1,100

9. Everything starts with a conversation, so let’s talk:
Safaraz Ali
Linkedin: https://uk.linkedin.com/in/safaraz
Twitter Handle: @SafarazAli
Tel: 0121 707 0550