Apprenticeship Levy around the corner

The Apprenticeship Levy, a ‘new’ tax for larger employers with a wage bill that exceeds £3m will come into effect 6 April 2017. What is it and how will it affect you?
Introduced with the aim to encourage employers to invest in apprenticeship programmes and the upskilling of their workforce, by 2020 the Government aim to have an aditional three million apprentices within the workplace.

How will the levy work in practice?

The levy will be charged at a rate of 0.5% of the employer's wage bill. However, employers affected by the levy will receive an allowance of £15,000 to offset against the levy payment.

The levy allowance will operate on a monthly basis and will accumulate throughout the year. This means employers will have an allowance of £1,250 a month. Any unused allowance will be carried from one month to the next.

What needs to be reported?

Recent HMRC guidance confirms employers will need to report how much Apprenticeship Levy they will owe each month:
  • from the start of the tax year if:
    • the employer’s annual wage bill (including any connected companies or charities) in the previous tax year was more than £3m.
    • the employer thinks their annual wage bill (including any connected companies or charities) for the 2017/18 tax year will be more than £3m.
  • if an employer’s annual wage bill (including any connected companies or charities) unexpectedly increases to more than £3m - they will need to start reporting when this happens.
An employer’s annual wage bill is all payments to employees that are subject to employer Class 1 secondary National Insurance Contributions (NIC). Earnings include any remuneration coming from employment, such as wages, bonuses, commission and pension contributions that an employer pay’s NIC on but not benefits in kind.

How we can help

For further information on this topic and what the impact it may have on you as an employer, please get in touch:
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