The apprenticeship levy

2 minutes to read

The new tax year starts on 6th April and as always, it brings a few changes that will affect your candidates’ take-home pay. In particular, this year sees the introduction of the apprenticeship levy. This is a new employment tax which amounts to 0.5% of an employee’s taxable income. It’s used to pay for apprenticeships in the UK country where that person lives.

How is the apprenticeship levy funded?

We’ll be paying the levy out of the funds we receive from recruiters for the candidate’s assignments, in the same way as Employer’s NI. We explain this on our website, in our updated ‘How is my take-home pay calculated?’ FAQ.

How will take-home pay change in the new tax year?

Remember, the apprenticeship levy is one of several changes happening in April, which will each have a differing effect on take-home pay. For most candidates it will be higher overall.

Isn’t there an allowance on the apprenticeship levy?

Yes. The apprenticeship levy isn’t payable on the first £250,000 that Key Portfolio workers collectively earn each month. We want our employees to get the benefit of this allowance but in practice, when we have new contractors joining every day and people earning different amounts, it’s almost impossible to accurately allocate this between everyone.

The only practical option is to collect the levy on all income, including the first £250K. Therefore, each month we’ll end up with £1,250 more than we need to pay the levy (this is 0.5% of £250K). It equates to £15,000 each tax year. Per person this is pennies, but it adds up to a significant sum.

We don’t want to keep this money, so we’re ring-fencing it to ensure we spend it in a way that our community are happy with. We’re currently gathering opinions from our contractors.

How are you communicating with my candidates?

We’re emailing all of our employees early next week. We’ve published some information for them about the new tax year changes and the apprenticeship levy on our blog. They’ll see links to these blogs when they view their pay advice slip. We’re also tweeting about it.

What should I do if my candidate asks me about the apprenticeship levy?

If a question comes your way, either ask the candidate to get in touch with us, or drop us a quick email and we’ll contact them. We have a whole team of experts who are dedicated to supporting contractors, so they’ll be in good hands. If you do feel you need to help, you can also contact us yourself (we’re here to support you too!).