The apprenticeship levy was introduced in April 2017 – and is still as relevant today - but do you know what it means for your business and the training of apprentices?
This blog is here to answer 15 of your burning questions about the apprenticeship levy, and how Total People can help you make the most of your apprenticeship levy funds.
The apprenticeship levy is a tax that UK businesses have to pay. These tax funds are added into a pot that is then used to fund apprenticeships for the employer. This ensures that businesses have enough funds to train and upskill their new workforce.
The apprenticeship levy is a compulsory tax for UK business who have a pay bill OVER £3 million each year. If you have a business that has a pay bill UNDER £3 million a year, you are exempt from the levy tax.
It was launched in April 2017 as a component of the Government's apprenticeship reforms, aiming to enrol 3 million apprentices by the year 2020.
There are many benefits of an apprenticeship levy, including:
The two main objectives of the apprenticeship levy are to cover the cost of training and to support the salaries of apprentices. The levy can also be used by smaller businesses, ensuring they have the opportunity to contribute to the developing workforce.
You have the opportunity to transfer 25% of your unused Levy to small enterprises, allowing us to collaboratively promote the growth of skills growth apprenticeships in different industries.
This funding is already allocated within your digital apprenticeship service account, and there are no extra expenses involved. Through gifting your levy funds, you are effectively endorsing apprenticeship training within other companies, assisting them in enhancing skills or hiring new personnel.
This helps support the development of the workforce in the UK, which ultimately benefits all businesses, including yours!
Billions of pounds of unspent employer levy funds have been returned to the Treasury, highlighting the need for effective utilisation. Unspent funds expire after two years and are reclaimed by the government. By gifting up to 25% of your unused levy, you can support smaller businesses instead of returning the funds.
This supports wider social and corporate responsibilities that benefit the economy and the workforce. Larger companies with unspent levy funds can gift the funds to industries they work with, that might require a stronger, more skilled workforce through apprenticeship training.
Are you considering gifting your unspent levy funds?
Contact Total People. Our dedicated Levy Gifting team simplifies the process for you through providing access to suitable funding, providing regular reports on gifted funds, and offering comprehensive support.
If you are a UK business that has a pay bill OVER £3 million each year, you are legally obligated to pay the apprenticeship levy tax.
If you meet the criteria, yet fail to pay the levy tax, you could be subject to legal implications depending on the extent of the evasion. It is always better to pay the levy fees and benefit from the apprenticeship funds.
You can claim levy funds if you are training apprentices. If you have overpaid your apprenticeship levy during the tax year, you will receive a refund as a PAYE credit.
Yes, if you wish to upskill existing employees and strengthen your workforce, you can use the apprenticeship levy funds.
If you employ less than 50 members of staff, the government will pay 100% of the apprenticeship training costs up the maximum band from apprentices aged:
If you have over 50 employees but do NOT pay more than £3 million per year on your pay bill, you pay just 5% towards the cost of training and assessing an apprentice.
The apprenticeship levy is charged at 0.5% of your annual pay bill. Check out our blog on how the apprenticeship levy is calculated for more information on how to break down your finances.
Businesses have 2 years (24 months) from the original deposit date to spend their levy funds before they expire. If the funds have not been utilised after this time period, they are then used by the government to fund apprenticeships for SMEs.
Ready to invest in the future of your business with apprenticeships?
Here at Total People, we have 30 years of experience working with businesses and supporting them through their apprenticeships.
Contact us to discuss how you can make the most of your Apprenticeship Levy funds.