What is the Apprenticeship Levy?
The apprenticeship levy is a taxation mechanism introduced to fund and promote apprenticeships across sectors. The levy aims to nurture businesses by enhancing essential training and crafting apprenticeship programmes.
How Does it Work?
- Employer Eligibility: The levy directly affects businesses with a payroll surpassing £3 million so if your organisation fits this bracket, you're automatically contributing to the levy.
- Levy Rate: The levy charges 0.5% of an employer's total payroll. This is collected monthly via PAYE, alongside other standard deductions like income tax and national insurance contributions.
- Usage: The collected amount goes into a digital account, available for employers to fund apprenticeship training or the crucial end-point assessment.
Essential Points to Remember:
- Time-sensitive Funds: Employers should note that any unused levy funds have a shelf life of 24 months. Post this period, unused funds revert to the government.
- Support for Non-Levy Payers: If your organisation's payroll doesn't hit the £3 million mark, there's still an avenue for you. Non-levy paying employers can shoulder just 5% of an apprenticeship course's cost and the government steps in to fund the remaining 95% via a 'co-investment' strategy.
- A Continuous Commitment: Remember, if your payroll exceeds £3 million, the levy isn't a one-time affair. Contributions are ongoing therefore ensuring a steady flow to support apprenticeship programs.