Since 6 April 2017 all large UK-based employers with a salary bill of more than £3 million per annum have had to pay a monthly levy tax. This is for a training fund which can only be spent on apprenticeships.
The total annual bill is currently set to 0.5% of your annual salary bill. Your levy bill is calculated on a monthly basis. You will also receive a levy allowance of £15,000 per year, from the Government, to offset against the levy you must pay.
These funds will appear in your digital account and can be used to purchase apprenticeship training to take on apprentices or to upskill your workforce. The Government will also contribute 10% top up to your digital account.
Your levy pot can only be used to purchase apprenticeship training and must be used within two years from the month you pay in.
How to calculate your levy pot
Let’s say your annual salary bill is £5.5 million per annum:
- 0.5% of your annual salary bill is = £27,500
- Minus your levy allowance of £15,000 = £12,500
- Your annual levy bill will be £12,500
However, the Government will also top this up by an extra 5%.
What happens if you don’t have enough in your levy pot?
If you don’t have enough funds in your levy pot, the Government will contribute 90% of the total monthly payments; you will then have to settle the other 10%.
National insurance and grants
Since April 2016, if you employ an apprentice below the age of 25, you will no longer be required to pay employer national insurance contributions for them.
You could also be eligible for an AGE grant of £1,500 if you take on an apprentice between the ages of 16-24 years old. Terms and conditions apply.