In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.
We are introducing the apprenticeship levy on 6 April 2017. The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.
The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.
When you need to pay it
As an employer, you’ll have to pay Apprenticeship Levy each month from 6 April 2017 if you:
- have an annual pay bill of more than £3 million
- are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million
Your annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions (NICs) such as wages, bonuses and commissions. You must include payments to:
- all employees earning below the Lower Earnings Limit and the Secondary Threshold
- employees under the age of 21
- apprentices under the age of 25
Your pay bill doesn’t include:
- earnings of employees under the age of 16
- earnings of employees who aren’t subject to UK NICs legislation
- earnings on which Class 1A NICs are payable, such as benefits in kind
How much you need to pay
Employers who aren’t connected to another company or charity will have an Apprenticeship Levy allowance of £15,000 each year.
The allowance reduces the amount of Apprenticeship Levy you have to pay by £15,000 across the year. This means that only employers with an annual pay bill of more than £3 million will pay the levy.
You can’t carry over any unused allowance into the next tax year.
Connected companies or charities will only have one £15,000 allowance to share between them.
If you start or stop being an employer part way through the tax year you can use your full annual Apprenticeship Levy allowance against the amount of the levy that you owe.