Further to the announcement that an Apprenticeship Levy will be introduced from April 2017 (reported here), the Department for Business Innovation and Skills (BIS) has issued some guidance. The purpose of the levy is said to “make apprenticeship funding sustainable”.
The headlines are:
- This will affect all UK employers in the private and public sector and will be payable on annual pay bills of more than £3 million.
- The levy will be charged at a rate of 0.5% of an employer’s pay bill, i.e. the first £3m of the payroll is exempt, thereafter its 0.5%. Levy payments will be collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), payable alongside tax and National Insurance. The pay bill will be based on total employee earnings subject to Class 1 secondary National Insurance Contributions (NICs). This is subject to a £15,000 fixed annual allowance for employers to offset against their levy payment. The guidance gives some examples of how this may be calculated.
- The guidance provides details on how the levy will be spent, including the introduction of a new Digital Apprenticeship Service (DAS) account which employers will be able to use to pay for training for apprentices.