What is the Apprenticeship Levy?
The Levy has been put in place from April 2017 to collect a TAX from large UK businesses with a turnover of £3 million or more, to generate funds that will support and enhance the quality and amount of apprenticeships available. It aims to use this money to pay for 3 million new apprenticeships by 2020.
When and how is it paid?
The relevant large UK businesses, subject to the Levy, will be required to start paying from April 2017. It will be paid on a monthly basis through the PAYE system the same way you pay Income Tax or NI contributions.
How is the levy calculated?
The rate is 0.5% of the employer’s paybill, however, all firms receive an offset allowance of £15,000. The £15,000 allowance is divided into 12 monthly allowances of £1,250. If the 0.5% of the monthly paybill is more than £1,250, the employer pays the difference as the Apprenticeship Levy.
How to report the amount that needs paying?
This is documented through your monthly EPS (Employer Payment Summary) reports.
Information for schools:
For most of the schools the governing body is the employer, and each governing body will be entitled to a £15,000 allowance.
All employers of smaller UK businesses with a turnover less than £3 million are excluded from the new Apprenticeship Levy. In case this limit is exceeded, annualised calculation will be triggered for the Levy and will continue for the rest of the tax year.