The apprenticeship levy will apply to all UK employers in both the private and public sectors which have annual pay bills of more than £3 million and will replace the current system. The new levy is set to be introduced from 6 April 2017.
The levy will be charged at a rate of 0.5% of your annual pay bill. You will have a levy allowance of £15,000 per year to offset against the levy you must pay. This means you will only pay the levy if your pay bill exceeds £3 million in a given year. You will pay the levy to HM Revenue and Customs through the PAYE process.
For the purposes of the levy, a business’ pay bill will be based on the total amount of earnings subject to National Insurance Contributions (NICs) including;
- Commission payments
- Pension contributions
If you want to know more about the apprenticeship levy and how it could affect your business, come along to our Employment Law Update where we will be discussing it in depth as well as discussing apprentices generally.