Apprenticeship Levy Explained

In 2015 the government announced there would be a levy introduced for apprenticeships to help increase the number of apprenticeship opportunities on offer in the UK.

The levy was introduced and took affect from May 2017 to change the way in which apprenticeships are funded in the UK to help both organisation and budding apprentices get a foot onto the career ladder without having to go to university.

The Apprenticeship levy in affect is a tax on companies which goes into a central pool to help develop both companies and young individuals and tackle the major skills crisis we are experiencing in England. The levy is charged at 0.5% of total payroll bill for companies who have a payroll of over £3million per annum, it is expected the government will generate over £3billion for apprenticeship funding for both SME’s and larger organisations.

So How does the Levy Work?

As previously mentioned you will only be affected by the levy if your organisation has a salary bill of £3million or more. You will be required to pay the HMRC 0.5% as a levy of your total salary bill, the levy is paid monthly into your Digital Apprenticeship Service Account (DASA).

If your business falls into the threshold for the levy you will be allocated a £15,000 allowance which is offset against your payments.

Here is an example:

Annual Salary bill: £10,000,000

Levy charge at 0.5%: £50,000

Minus Allowance: £15,000

Total Payable: £35,000

As an added benefit the government will add a 10% uplift to your monthly payment to help contribute towards your apprenticeship training of which will be monitored via your DASA account. In your account you can select and pay government certified training providers. For every £1 you pay into the levy you will received £1.10 in apprenticeship training funding.