The HMRC has issued a policy paper containing detailed information about the Apprenticeship Levy. Employers in “all sectors” started paying the Levy in May. The Levy will be paid to the HMRC by employers with yearly wages bills of £3 million and above. Funds are transferred to HMRC via the PAYE system.
Why the government have introduced the Levy
The government introduced the Apprenticeship Levy, and the Digital Apprenticeship Service, as a way to reach the target of 3 million apprenticeships by the year 2020. The Digital Apprenticeship Service gives employers more control over how they spend apprenticeship funds.
At the moment it is felt that not enough is being done to create new apprenticeships throughout the UK. By 2020 the government hopes that all apprenticeships will already be being arranged through the Digital Apprenticeship Service. The changes that have happened only affect employers who pay the Levy. In 2018, more employers will need to use the new service. The HMRC offers more advice on this.
How the Apprenticeship Levy is paid to HMRC
Only employers with a yearly wages bill of over £3 million pay the Apprenticeship Levy. Each employer is required to work out the amount of Levy they have to pay. Your total yearly wages bill multiplied by 0.5 percent is your Levy amount. The amount of Apprenticeship Levy you pay is offset against an allowance of £15,000. Your Levy is paid to HMRC through the current PAYE system. You make your payments to HMRC on a monthly basis.
What is the impact of the Apprenticeship Levy?
The Apprenticeship Levy increases training opportunities for young people. This boosts productivity throughout the workforce. Over the course of time, it is thought that there will be a positive effect on the economy. It is possible there could be an increase in the amount of wages paid in the long-term.
The system continues to support the best standard of training for new apprentices. Employers dedicated to creating new opportunities stand to benefit the most by getting out more than they pay in the Levy.
Businesses new to apprenticeships still have to pay the Levy. They have to alter their strategy in order to get the best value from the system. HMRC have promised to offer employers guidance in order to help everyone benefit from the Digital Apprenticeship Service. At the moment, costs to HMRC associated with introducing the system are about £7 million.