BUSINESS
APPRENTICESHIP LEVY LOWDOWN
Paul Nixon
ANNOUNCED IN THE 2015 BUDGET, THE APPRENTICESHIP LEVY WILL BE INTRODUCED IN APRIL 2017, SO NOW IS THE TIME FOR BUSINESSES TO BEGIN PLANNING AHEAD FOR THE NEW SYSTEM. IF THE LEVY APPLIES TO YOU, THEN YOU’ LL NOT ONLY NEED TO FACTOR IN THE NEED TO PAY IT, BUT ALSO EXPLORING THE POTENTIAL OPPORTUNITIES ARISING FROM THE NEW EMPHASIS ON APPRENTICESHIPS AND PRODUCTIVITY.
What is the Apprenticeship Levy?
It is a new charge from which the government hopes to raise £ 3bn by 2020, as a way of helping to create 3 million new apprenticeships before the next election.
The Levy will be charged at 0.5 % of payroll, but thanks to an allowance of £ 15,000 which is ofset against that payment, only firms with a payroll of £ 3m or more will actually have to pay. In fact, when we look closely at those figures, it translates to barely 2 % of employers across the UK.
Following a consultation last year, guidance on how the new system will work has been coming in stages – and more is promised between now and next year.
How is it calculated?
The Levy will be calculated on a business’ pay bill, which is defined as the total amount of earnings that are subject to Class 1 secondary National Insurance Contributions( NICs) and earnings below the secondary threshold will also be included. Businesses will have to calculate the amount they owe and pay it each month to HMRC through the normal PAYE system alongside income tax and NICs.
How can businesses benefit from the Levy?
A new Digital Apprenticeship Service( DAS) is being set up which will offer an online portal where firms can manage their account, search for and access apprenticeship services and the government plans to have the system up and running in advance of the first payments being made. Larger businesses will be able to operate different accounts for different PAYE schemes if they wish.
If there are any funds held in accounts, then to begin with, the government will apply a 10 % topup to those funds and businesses should also note that money in the account has an 18-month use-it-or-lose-it shelf life.
What should businesses be doing now to prepare?
Firstly, those that will be at or over the £ 3m payroll limit will need to ensure that the Levy has been factored in to financial or commercial plans for next year and beyond. The government promise a simply and user-friendly system, but it would be worth checking that the payroll team are on the ball early.
The introduction of the Levy and the apprenticeship system that will go with it is an ideal opportunity for businesses to review their existing training and apprenticeship programmes. There will be money available in the new accounts so it makes sense for firms to think carefully about how they plan to make the most of it. The system will provide information about approved apprenticeships and enable firms to access and pay for them directly, but you will not be able to use the new system to finance any training or apprenticeships started before April 2017.
It is worth noting that the Levy will apply equally across the UK, but the DAS will only operate in England. Apprenticeships are a devolved responsibility, so the administrations in Scotland, Wales and Northern Ireland will be making their own arrangements.
The start date is not far away. What’ s more there are still plenty of details still to come about how it will be structured and operate, as the government will be publishing three more rounds of detailed guidance in June, October and December.
Wilkins Kennedy can help. If you would like to know more about how the Apprenticeship Levy will affect your business in 2017, email Partner, Paul Nixon, at paul. nixon @ wilkinskennedy. com or call on 01233 629255.
www. wilkinskennedy. com
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