As part of the broader government target for 3 million Apprenticeships by 2020, in April 2017 the way Apprenticeships are funded changed. This had wide implications for all organisations.
This guide explains what has changed and how we can support you to provide Apprenticeships in your organisation.
What is the Apprenticeship Levy?
Since April 2017, organisations that have a payroll of more than £3 million, have been be required to make a payment of 0.5% of payroll above this threshold.
The levy payment is held in an electronic account (DAS or Digital Apprenticeship Service) and is available for organisations to spend on accredited Apprenticeship training programmes.
Providers such as the RNN Group (the parent organisation of RNN Training) and its subsidiary businesses (Create Skills, Aston Training & Charnwood Training) are registered to help provide this training.
Does it affect my organisation?
Yes, if your payroll is over £3 million per year. All UK based employers receive an allowance of £15,000 to offset against payment of the Levy, which means only employers with a payroll over £3m have to pay the Levy. The basic charge is 0.5% of your PAYE bill.
An employer with a payroll of £10m per annum.
Levy charge = £50,000 (0.5% x £10m)
Less allowance of £15,000
Overall Levy = £35,000 per annum
How is the Levy be collected?
The Levy is collected on a monthly basis through Pay as You Earn (PAYE) alongside Income Tax and National Insurance. You are responsible for declaring the amount you must pay monthly, the month after you have calculated the liability.
What can the Levy be spent on?
Levy payments can be used on either new Apprenticeship standards or existing frameworks, with an approved training provider, such as RNN Group. Funds in your account can only be spent on the cost of training and end point assessments relevant to the new standards. It cannot be used for wages or expenses.
How will the Levy work?
The £15,000 Levy Allowance will be paid as a monthly amount of £1,250 and any unused allowance will be carried forward to the following month until used.
The payments expire 18 months after they have entered your account, unless you spend them on Apprenticeship training.
What do I need to do now?
You now have the opportunity to think about how the Apprenticeship Levy can benefit your business. You could look into recruiting apprentices for the first time, or expand your existing Apprenticeship programme by moving into new occupational areas and business units.
RNN Training can provide resource to support you to develop your strategic Training and development plans. Contact us for an informal discussion.