Frequently Asked Questions about the Apprenticeship Levy for Employers
We are often asked what is the Apprenticeship Levy? Navigating your way around the Apprenticeship Levy can be difficult. This guide addresses the most frequently asked questions regarding the apprenticeship levy; how to spend it and how best to maximise the funds to benefit your business.
What is the Apprenticeship Levy?
- What is the Apprenticeship Levy?
The Apprenticeship Levy is part of the government’s plan to increase the quantity and quality of Apprenticeships. The Levy is a tax that came into force on April 2017 which aims to fund three million new Apprenticeships in England by 2020.
- How will the Levy benefit my business?
One of the most significant benefits of apprenticeships, for both employers and staff, is that they help organisations keep their employees motivated and committed for the long-term, by helping them develop their skills. Recruiting new staff is costly, but up-skilling existing staff through apprenticeships is a great way to fill any skills gaps and allow your business to source future managers and leaders from within.
With the rising costs of higher education many young people are investigating alternative career pathways, and by investing in apprentices who are just starting out, you’ll be able to nurture home-grown talent with the most up-to-date and relevant skills your business needs.
- Aren’t Apprenticeships just for ‘tradespeople’ – plumbers, builders and electricians?
Absolutely not! Apprentices are available in every industry sector and provide exciting, high quality opportunities in their chosen field.
Apprentices can now gain qualifications ranging from those equivalent to five GCSE passes, right up to degree level.
Find out the different sectors NTG Training offers apprenticeship training.
Paying the Apprenticeship Levy
- Who pays the Apprenticeship Levy, and how much is it?
Whether a company pays into a levy account depends entirely on the business’ annual payroll. Businesses with an annual payroll of £3m plus will be obliged to pay into a levy digital account.
The Levy is deducted monthly and is only a small percent of the annual payroll, currently at 0.5%, with an allowance of £15,000 to offset against the levy payable.
All employers hiring Apprentices will have to pay for Apprenticeships either through the levy pay bill tax or through a co-investment cash contribution.
If you have a pay bill of less than £3m, you will not pay the levy, but you can still access apprenticeship training by contributing 5% of the cost of training an apprentice (as of April 2019) and the government will ‘co-invest’ by paying the remaining 95%.
Businesses with under 50 employees won’t pay anything if they employ apprentices under the age of 19, and they’ll receive a £1,000 payment with an additional £1,000 payment to the training provider.
More information can be found here from the Government website.