THE APPRENTICESHIP LEVYAN UPDATE

What is the Levy?The Levy is an employer tax being introduced by the government, with the aim of creating three million new apprentices in England over the next three years. It has been introduced to help employers recruit and train these apprentices - and their existing staff - whilst raising money to fund others.

Do I have to pay?Yes - If your company is in England and employs over 250 staff, or if you have a payroll of over £3million in England. This applies across public and private sector businesses, academies, universities and chari-ties: nobody is exempt.

The Government’s New Apprenticeship Levy comes into force in less than three months and depending on the size and location of your business, could have quite an impact.

There are still a number of grey areas around the Levy so we have compiled the following update of key Q and As for employers, contractors and agencies. We will continue to respond to questions on the subject between now and April, please watch this space for further advice.

When does this start?From 6th April 2017. A new portal known as the Digital Apprenticeship Service (DAS) is being set up and will be live when the Levy launches. This portal will be open to everyone paying the Levy (your company will have its own DAS account).

How much do I have to pay?To whom and when?It is a tax of 0.5% of your PAYE - paid every month on a pro-rata basis. Employers send HMRC their PAYE bills at the end of every month and they will then be advised of their monthly Levy payment for that period, which is made the following month along with your usual tax and NI. There may be some months that the balance drops beneath the threshold and in this case, no Levy payment will be taken the next month. Your Levy payment can be calculated onhttps://estimate-my-apprenticeship-fund-ing.sfa.bis.gov.uk

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What do I get in return?An annual allowance of £15,000. This can be used to offset the cost but you will be expected to invest this in training - the long-term aim being that it will help improve productivity for your company and industry as a whole. The DAS portal will help businesses find apprentices, buy training, use the digital vouchers and connect with accredited suppliers. You’ll need to use the vouchers within a certain time frame - this was initially 18 months but has been extended to 24 months.

What if I want to train in-house, not withthe accredited contacts on the portal?This is fine, but you must have your training staff approved and then inspected by Ofsted, working under the SFA’s quality guidelines.

What if I already contributeto an industry-wide trainingLevy?Industries will need to decide their own specific Levy approaches going forward, but payments to those that currently exist, for example the Construction Industry Training Board Levy, do not make companies exempt: the Apprenticeship Levy applies to everyone that meets the criteria.

How does this work forcompanies hiring contractorsthrough a third partyrecruitment agency?

The Levy is paid by the company that pays the salary, so if the agency makes the appointments, hires the staff and pays the wages, then it is the agency that pays the Levy. The DAS account and benefits will therefore also belong to the agency, although there will be clear advice at launch about how this can be shared between the agency and the end employer. Benefits can poten-tially be offset and costs passed on for indirect benefit - although at this stage, the specifics of how this will work have not been specified.

What about apprenticesI have already hired?The Levy will not affect the way you fund training for apprentices hired before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.

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What if I don’t want to hire apprentices?You will still need to pay the Levy if your company is eligible. You will get a DAS account and vouchers and you will be able to redeem these against training for existing employees, so there will still be benefits. Details of this are still being ironed out.

What if we are a group of companies allsharing one payroll?You will still pay a percentage of your overall payroll as one company, but only be entitled to one £15,000 allowance and you will need to decide yourselves how that funding is spent between the group.

What if most of our employers are temporary or contract workers?The pro-rata element of the system ensures you do not overpay. You pay monthly according to the salary paid the previous month.

What if I am based in England but my staff work in Wales and Scotland? The Levy is only calculated on salary bills for employees in England. This applies to recruit-ment agencies providing staff for clients - the percentage charge will be calculated based on people working in England only (which means that foreign companies with staff working in England will also have to pay it, if their salaries or numbers mean they exceed the threshold).

Where can I find out more?Official advice is to keep in touch with the main advice line - 0800 015 0600. There are elements of the Levy that still need clarifying and regular updates are being given.

We will also be providing regular updates as further details are released.

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