The Apprenticeship Levy - What does it mean for you?

The Apprenticeship Levy - What does it mean for you?

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  Training Industry NewsEnvision News  

This month sees the introduction of the much talked about Apprenticeship Levy, a scheme introduced by the Government which will upskill business across the United Kingdom over the next three years.

The scheme aims to create 3 million more Apprenticeships by 2020, but, looking past the figures, the key goal is to improve the skills within businesses across the UK, supporting individuals in gaining substantive new skills.

What exactly is an Apprenticeship?

An apprenticeship is a continuous professional development programme. An apprenticeship programme takes a miniumum of 12 months, but can last as long as four years. During this time, 20% of an apprenticeship's training is done off site, in the form of classroom learning, self-study and exams.

While an apprenticeship was generally regarded as the route into the jobs market for manual jobs such as in the construction and service industries, nowadays people can become accountants, investment specialists and even solicitors through a high level apprenticeship programme.

Who has to pay the Levy?

Employers with an annual pay bill exceeding £3 million will spend 0.5% of their total pay bill to the apprenticeship levy. Employers who fall into this category still have to pay the level irrespective of whether or not they use the benefit, and even if you already contribute towards another training arrangement.

The ‘levy allowance’ of £15,000 per year, means that the total amount you need to spend is 0.5% of your pay bill, minus £15,000. The first payment will be taken 6 April 2017 (appearing in the account late May 2017) to be included in your usual PAYE payment to HMRC.

If you employ seasonal staff you may be required to pay the levy in some months but not others. The PAYE system will ensure that employers pay the correct amount of levy for the tax year.

apprenticeship levyWhat the payment includes:

The pay bill is the total amount of employee earnings subject to Class 1 National Insurance contributions including:

  • Wages
  • Bonuses
  • Commissions
  • Pension contributions

Any apprenticeship levy payment to HMRC will be allowable for Corporation Tax.

Digital Apprenticeship Service

Digital Apprenticeship Service, or DAS, is where your levy contribution will be held until spent via a digital voucher through an approved training provider. Funds deposited into the DAS system will then remain for 24 months, expiring after this point.

The £15,000 levy allowance will accumulate throughout the year at a rate of £1,250 per month, any unused funds will be carried to the next month for up to 24 months. Each payment made is subject to a 10% government top, which will be reflected in your DAS balance.

The allowance can only cover training and NOT wages, expenses or other costs.

Apprenticeship Standards and Frameworks

An apprenticeship framework:

  • covers all the statutory requirements for an apprenticeship programme in England
  • is used by colleges, employers and training providers to make sure that all apprenticeship programmes are delivered consistently
  • ensures all organisations work to national standards
  • includes the names of all qualifications and what each qualification is worth
  • gives guidance on how to get onto an apprenticeship programme, the time it will take and career paths available after an apprenticeship

To access this detailed information, please click here.

The government has also published comprehensive standards for a wide range of industries. These standards describe the skills required for almost every job role within any industry. You can take a look at these standards here.

 

The SFA have released a helpful video guide to the DAS and the Levy below:

How to use your Levy Allowance

Organisations agree the cost and monthly payments directly with the chosen provider, at which point formal contracts are signed with the provider.

All Apprenticeships are assigned a funding band, if the cost of the apprenticeship is above the funding band upper limit; the employer then pays the additional costs with no Government support.

Once agreed, monthly payments will then be taken automatically from the employer’s ‘DAS’ account and sent to the provider via electronic vouchers.

When all of your available funds have been used, further Apprenticeships can be subject to co-investment where the Government will pay 90% and the employer 10%.

Next Steps

From the 1st May the New Apprenticeship regimes will come into force and employers will be able to start rolling out Apprenticeships fund via the levy.

Envision Training is not an Apprenticeship provider but is an advisor and can work with you to use your Apprenticeship Levy. Our friendly experts are all CIPD qualified, and as such can tell you everything you need to know about the Apprenticeship Levy.

If you would like more information, call us on 0115 8705075, or email trainingteam@envisiontraining.co.uk.

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