Muras Matters: New Apprenticeship Levy

New Apprenticeship Levy


The way the government funds apprenticeships is changing. Some employers will be required to contribute via a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.


The Apprenticeship Levy takes effect from 6 April 2017 and applies to employers with a pay bill of £3 million or more. It is calculated as 0.5% of the pay bill with a deduction for a levy allowance of £15,000 before any payment is due. The Levy will apply to all employers who meet the criteria, regardless of whether they have any apprentices.

A pay bill is defined as the amount in a tax year which generates a Class 1 National Insurance liability for the employer, such as salary. The Levy will be paid on a monthly basis through the PAYE system, with payments first falling due from May 2017.

Companies which are ‘connected’ are only entitled to one £15,000 levy allowance and can choose how to allocate it. Companies are connected if they are under common control; for example if one company has control of another or both companies are under the control of the same person or persons. Once the allocation is decided upon it cannot be changed for the remainder of the tax year.

The Levy is being applied in order to fund further apprenticeships. All employers, including those who don’t pay the Levy, will be able to access apprentice funding online using digital vouchers.

For more information on the changes described above or advice on the effects of the new rules, please contact our Tax Director Jenny Marks.

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