In the first of our In the Spotlight series, we’re exploring the world of modern-day apprenticeships. We’ll establish which organisations needs to pay the Apprenticeship Levy and how to calculate their contribution.
The Apprenticeship Levy is paid by all UK companies (including linked companies) with an annual pay bill of £3,000,000 or more. Employers that fall into this category are then required to pay an additional 0.5% of their pay bill into the Levy. The payment is then offset with a single payment up to a maximum value of £15,000 per company or group of connected companies, per year.
Below are some example calculations to help demonstrate what this could mean for your business.
Example 1: Annual pay bill is £3,000,000;
3,000,000 [pay bill] x 0.5% [levy] – £15,000 [offset payment] = £0 [levy payment due]
Example 2: Annual pay bill is £40,000,000;
40,000,000 [pay bill] x 0.5% [levy] – £15,000 [offset payment] = £185,000 [levy payment due]
To learn more about who qualifies for paying the Levy, click here.
The employer’s annual pay bill is all payments to its employees that are subject to Class 1 Secondary National Insurance contributions, loosely speaking, this is all wages, bonus payments and any commission payments.
There are certain employee groups which should not be included in your pay bill calculation;
Employers should also exclude earnings on Class 1A NICs – such as benefits in kind.
To find out more about the annual pay bill and what to include, click here.
You will be required to pay your Apprenticeship Levy monthly, as part of your PAYE bill. As a Levy paying employer, it is your responsibility to report on how much you owe each month to HMRC. This should be done through your Employer Payment Summary and should include;
For more information on calculating your Apprenticeship Levy into PAYE schemes and payment schedules, click here.
To find out more including how to access your funds, read our next blog in this series; Apprenticeships Part 2 – How to access funds from the Apprenticeship Levy
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