Apprenticeship Changes 2017

Apprenticeships are changing on 1st May 2017. This page is aimed at local employers who need a nutshell explanation of the apprenticeship changes 2017 to help breakdown and understand how this affects you and your business. Don’t worry, it is still an easy process and there is plenty of support to get things done correctly. Call us on 0161 870 9690 to speak directly to our apprenticeship advisor, we are here to help, for free of course.

The Apprenticeship Levy

From 1st May 2017 the way apprenticeships are funded will change. The Autumn Statement 2015 sprung a surprise ‘payroll tax’ to help fund an increase in apprenticeships. The apprenticeship levy will be set at 0.5% of an employers wage bill and will be collected through PAYE. This only applies to businesses with over £3,000,000 annual wage bill. Therefore, we must divide the information into two sections, Levy Payers and Non Levy Payers.

Non Levy Payers

If your business has a wage bill of less than £3,000,000 per annum (yes that’s 98% of all businesses!) you will not have to pay any new apprenticeship levy. There are still changes to the funding and potential costs to your business, but we will explain this if you scroll down.

Do you have less than 50 Staff?

  • If you employ a 16-18 year old apprentice, there will be no training fee as it will be fully Government funded.
  • If you employ a 19+ apprentice, you will need to pay 10% of the training. 90% of it will be funded by the Government.
  • If you employ a 20 year old business admin apprentice, you will be charged approximately £200 in total as the qualification costs £2000.
  • This payment will normally be spread out in pre-agreed instalments.
  • If you recruit a 16-18yr old apprentice, you can receive a £1000 incentive from your training provider. This replaces the £1500 AGE GRANT.

Do you have 50+ staff members?

  • Regardless of apprentice age, you will need to pay 10% of the training. 90% of it will be funded by the Government.
  • If you employ a 17 year old business admin apprentice, you will be charged approximately £200 in total as the qualification costs £2000.
  • This payment will normally be spread out in pre-agreed instalments.
  • If you recruit a 16-18yr old apprentice, you can receive a £1000 incentive from your training provider. This replaces the £1500 AGE GRANT.

Levy Payers

If you are a large employer with an annual wage bill of £3,000,000+ then you will have to pay the apprenticeship Levy which is set at 0.5% of an employer’s wage bill. However, this will be offset by a £15,000 tax-free allowance. This sounds a bit confusing, but we will clarify this if you scroll down.

How do you pay the Levy?

  • The Apprenticeship Levy will be collected via Pay As You Earn (PAYE)
  • Any apprenticeship levy payment to HMRC will be allowable for Corporation Tax.
  • Once you have declared the levy to HMRC you will be able to access funding for apprenticeships through a new digital apprenticeship service account.
  • You will get a 10% automatic monthly top-up. So for every £100 that enters your digital account to spend on apprenticeship training, you get £110.
  • If your levy account is insufficient, for example, if the account has £5000 in it, but you need £20,000 worth of training, then you will need to contribute 10% to the training costs of any apprentices not covered by the money in your digital account.

How much do you have to pay?

The amount you pay depends on your wage bill.

EXAMPLES:

Employer of 250 employees, each with a gross salary of £20,000:

  • Paybill: 250 x £20,000 = £5,000,000
  • Levy sum: 0.5% x £5,000,000 = £25,000
  • Allowance: £25,000 – £15,000 = £10,000 annual levy payment.

ESTIMATE YOUR APPRENTICESHIP FUNDING

Use this tool to estimate if your organisation will pay the apprenticeship levy, how much your organisation will have available to spend on apprenticeships and how much the government will contribute towards the cost of training.

APPRENTICESHIP CHANGES 2017

Employers will now have to pay just 10% of the apprenticeship cost, with 90% of apprenticeship training costs being paid for by the Government Levy funds. (With some exceptions)

For smaller employers with fewer than 50 employees the Government pays the full 100% of the training if the employer takes on 16- to 18-year-old apprentices or 19- to 24-year-olds formerly in care or who have an EHCplan.

ASK US ANYTHING

If you want to employ an apprentice but are unsure about the new process and how much it will cost, please get in touch on 0161 870 9690 or click the contact button. We will be our pleasure to assist.