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Apprenticeship Levy update

28th March 2017

Apprenticeship Levy

Payments by employers:

  • As of April 2017, employers with a salary bill (excluding benefits in kind) in excess of £3 million in a year are required to pay 0.5% of the excess over £3 million as a levy through their payroll;
  • The £3 million entry point for paying Apprenticeship Levy applies to the salary subject to Employer Class 1 NICs, so will exclude foreign workers, under 16’s, etc, but includes those over pension age who are still employed;
  • The annual allowance of £15,000 is allocated to whichever payroll the employer chooses. However, the allowance can only be allocated to one payroll, so in a group situation where each company’s payroll is under £3 million there will be a waste of the allowance;
  • Connected companies are treated as a single employer. The 'connected persons' rule for the Employment Allowance is largely based on the connected persons rule used more widely for tax purposes (companies under common control and subsidiaries);
  • Charities may be connected to each other where they have common or connected trustees and carry out similar activities. Charities will also be connected with companies under common control.

Employers claiming funding:

  • From May 2017 this levy will be ‘paid into an account’ for the employer to access within 24 months for the purpose of providing training to apprentices;
  • In order to access the funding the employer will need to set up an account online through the Government Gateway;
  • Funds are also available to an employer who is not required to pay the levy. The employer will be required to contribute 10% of the cost of the training and the government will fund 90% of the cost. The same contribution requirement will apply to employers paying the levy that spend more on training than their levy covers;
  • The funds will be used to purchase training from providers registered on an approved list;
  • There is extensive guidance on HMRC’s website and a specialist department providing technical support for the Apprenticeship Levy: apprenticeships.levy@bis.gsi.gov.uk


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