What is the Levy?
From the 6th April 2017 all companies in England with a payroll of £3 million or over pay the Apprenticeship Levy, regardless of whether you employ apprentices or not. The Government will add 10% to all of your Levy payments, for every £1 you pay the Government will add 10 pence meaning a total of £1.10 will be added to your account. You have a maximum of 2 years to spend your Levy payments.
What can it be used for?
The Levy is an opportunity to invest in all of your workforce as apprenticeships are open to both new and existing employees, of any age and levels. The Levy can only be spent on apprenticeship training with an approved apprenticeship training provider. BCE are approved as a ‘main provider’ of apprenticeship training.
How much will it cost?
The Levy is set at 0.5% of your payroll over £3 million and will be paid monthly to the HMRC via your normal PAYE payments. For example if your annual payroll was £4,000,000 you only pay the levy on your payroll that is over the £3m threshold, your Levy would be £5500 (0.5% of £1M = £5000 +10% =£5500).
Even if you do not have enough money in your Levy account to fund all of your apprenticeships the Government will co-invest 95% of the outstanding cost (English and Maths functional skills are fully funded by the Government and do not come out of your Levy funds). For Example, if we assume your payroll is £4m you would have a monthly payment of £458.33 (£5500 divided by 12 months = £458.33).
The cost of a L2 or 3 Adult Care Worker Apprenticeship is £3000, so if you had 2 apprentices at £3000 each your Levy would not be sufficient to pay the full cost and would need some co-investment, for example 2 x £3000 Apprenticeships = £6000, minus £5500 (Your Levy) = £500 shortfall, the Government will contribute 95% towards the shortfall leaving you to pay £25+vat.
Even if you do not have any money in your account, the Government would co-invest 95% of the cost, you would only need to pay £150+vat towards each apprenticeship (£3000 – 95% = £150).
If you are a levy-paying employer, you can now create an account https://www.gov.uk/guidance/manage-apprenticeship-funds on the Digital Apprenticeship Service to:
• add or amend information about apprentices and training
• authorise payment to the training provider
• view payment activity in your account and view your balance
• pause or stop a payment to your training provider