The Government has confirmed that the Apprenticeship Levy will definitely come into force on 6th April 2017.
The apprenticeship levy requires all employers operating in the UK, with a wage bill of over £3 million a year, to make an investment towards apprenticeships. It will introduce a levy to be paid of 0.5% of the total amount of earnings subject to Class 1 secondary NICs and it will be paid via PAYE. The Government are defining ‘employer’ in this situation as someone who is a secondary contributor, with liability to pay Class 1 secondary National Insurance contributions (NICs) for their employees. Any apprenticeship levy payment to HMRC will be allowable for Corporation Tax.
In return employers will receive a levy allowance worth £15,000 for each tax year. This allowance can be used to provide training but any unspent funds will expire after 18 months. Training can be booked with any training provider on the new Register of Apprenticeship Training Providers. You will need to register an account in order to utilise the levy allowance. You should be able to do this from January 2017. The government will apply an additional 10% monthly to your levy allowance fund for you to spend on training and assessment. Unfortunately, in first year of the new system, employers will not be able to transfer digital funds to pay for training of apprentices employed by ATAs (Apprenticeship Training Agencies) but the government are considering this from 2018. The levy allowance will apply to all apprenticeships including existing ones still in place from April 2017 but can only be used for people in current employment with that company.
For companies who do not qualify to pay the levy, the levy allowance system will not apply until at least 2018. The thinking is that when this is bought in, companies will pay a contribution towards training instead. Until then, companies are welcome to use the list of providers to choose training on normal terms.
More information should be available soon with further clarification on how the new scheme will work but all existing apprenticeships frameworks will be phased out by 2020.
If you need any help with Apprenticeship contracts, please speak to your HR Advisor or call one of the team on 01924 827869.