The Government have been determined to reduce the unemployment rate in the UK, and one of their key policies has been to increase the number of apprenticeships available to young people
A specific pledge was to create three million new apprentices by 2020, which raised more than a few eyebrows about how it was going to be funded. Sure enough, the money became an issue, and now an apprenticeship levy has been introduced to help pay for them.
Who has to pay the apprenticeship levy?
Not everyone has to contribute, however. It only applies to businesses in England whose annual pay bill is over £3m. This is defined as employee earnings subject to Class 1 secondary NICs.
That means that actually only about 2 per cent of UK employers will pay it.
How much is the apprenticeship levy?
The levy is not a flat rate; it’s calculated at 0.5% of a company’s annual pay bill. Each employer has an allowance of £15,000 to offset against the levy, which effectively means that those with a pay bill of £3m or less don’t pay the levy.
An easy way of visualising your levy amount is with the following sum: (Annual pay bill x 0.5 per cent) – £15,000 = your levy payment
If the bit in brackets is £15,000 or less, you won’t have to pay anything.
How is apprenticeship levy collected?
It is collected by HMRC through PAYE. Employers can then access apprenticeship funds through the Digital Apprenticeship Service (DAS).
What if you don’t pay the levy?
Things are a little different for those companies who don’t pay the levy. Those who don’t qualify for the levy must pay 10% towards the apprenticeship training, with the government making up the remaining 90 per cent.
Non-levy payers can’t use the same DAS as those who do pay at the moment (this should happen in 2018). Instead, employers must work out a payment schedule with the training provider. Once that provider has proved you’re paying, the government will pay its contribution.
The whole thing can be a little confusing, especially as legislation and processes are changing all the time. However, you can find much more information on the GOV.UK website and the Learndirect site.
For those unsure about how to get into the electrical industry, or for those wanting to dispense advice to potential electricians, the following graphic from QVS Direct has a wealth of invaluable information. It’s got information about whether it’s the right career path for you and the various ways to get into it, including more details on apprenticeships.
Just click on the little orange lightbulbs for more information….