6 ISSUES FOR JUST £6 Subscribe to Business & Professional Life today CLICK HERE

Apprenticeship Levy 2017: Everything you need to know

PUBLISHED: 13:37 01 March 2017 | UPDATED: 16:57 01 March 2017

The initiative will support the demand for a major increase in apprentices in 2020 (c) goodluz - Fotolia

The initiative will support the demand for a major increase in apprentices in 2020 (c) goodluz - Fotolia

goodluz - Fotolia

For all you need to know about the upcoming Apprenticeship Levy 2017, Omega Resource Group have created this comprehensive guide

What is the Apprenticeship Levy 2017?

In spring 2017 the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new apprenticeship levy, and there will be changes to the funding for apprenticeship training for all employers.

In the 2015 Summer Budget, the Government announced that it would introduce an initiative to support the demand for a major increase in apprentices by 2020, and to address the decreased focus on employee training outside of the workplace.

Set to come into force in April 2017 (with payments to begin in May 2017), the levy will require large employers to invest in apprenticeships, with the size of the investment dependent on the size of the business.

The purpose of the levy is to encourage employers to contribute towards this rising demand for apprenticeship programmes, and to raise additional funds to improve the quality of the training schemes.

The Apprenticeship Levy, paid by large employers both in the public and private sectors, upon payment will be accessible in the form of a digital apprenticeship service account. This will then allow the businesses to select and pay for Government-approved training providers and post apprenticeship vacancies both online and offline.


Who will need to pay and how will it be paid?

The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.

The levy threshold is calculated by size of payroll. Employers with a wage bill of more than £3 million will be required to pay the levy. This payroll threshold only applies to approximately 2% of employers, which means only larger SMEs fall into this group. The levy amount is 0.5% of a company’s payroll, provided it exceeds the £3 million margin. In addition, the Government are also introducing a ‘levy allowance’ of £15,000 per year, which will be subtracted from the 0.5% total.


How will the Apprenticeship Levy be collected and recorded?

You’ll need to pay the Apprenticeship Levy each month through the PAYE process in the same way you pay Income Tax or National Insurance contributions.

Each month, starting from May 2017, the levy will be collected through the PAYE system, alongside Income Tax and National Insurance Contributions. Single employers with multiple PAYE schemes will only have one allowance.

Levy raised against the payroll of their employees who live in England will be available to fund apprenticeships. Funds raised against employees who live in Scotland, Wales or Northern Ireland will go into general taxation.

From 6th April 2017, and in addition to payment, businesses that are obliged to pay the tax will need to report how much Apprenticeship Levy it owes to HMRC each month. As a result, the business’ payroll team will need to send an Employer Payment Summary (EPS) as well as a Full Payment Submission (FPS). However, you will not need to report Apprenticeship Levy on your EPS if you haven’t had to pay it in the current tax year.

Records of information that the business has used to calculate the levy payment should be kept for at least three years after the tax year which they relate to.


How do employers benefit from the Apprenticeship Levy?

Once you have declared the levy to HMRC, you will be able to access funding for apprenticeships through a new apprenticeship service account. Employers in England will be able to reclaim their Apprenticeship Levy contributions as digital vouchers to pay for training apprentices. Once the levy has been declared to HMRC, businesses will be able to access a digital funding account set up by the Government.

As an add-on, the Government has offered to contribute a 10% top-up to a business’ monthly contribution to the levy. So, for every £1 an employer contributes per month, they can spend £1.10 on apprenticeship training through the digital account. The Government has also announced that any unspent funds in the digital account will expire after 24 months.

In order to access the digital account once payment has been made to the levy, you will need to create an account with HMRC online, using Government Gateway login details for the PAYE schemes that you want to include in your account. Once you’ve declared your levy for April 2017, you will see your balance in your account at the end of May 2017.


Choosing and negotiating Government-approved training:

Employers will need to choose the training they would like their apprentice to receive throughout their apprenticeship. All employers must choose an apprenticeship training provider and negotiate the cost of the training. With the implementation of the Apprenticeship Levy, the Government has decided to introduce new funding caps on each apprenticeship. This is the upper limit to which the Government funding from the digital account can be used to pay an apprentices training.

There are a proposed 15 new apprenticeship bands, ranging from £1,500 to £27,000. This value is the maximum amount that the Government will fund from a business’ digital account. Upon negotiation, if a value above the maximum is negotiated for any reason, the business will have to fund the additional surplus separately from the digital account.


Employers that don’t pay the levy (co-investment):

If an employer has not paid the levy and would like to train an apprentice, they will need to co-invest 10% and will benefit from government funding to cover the remaining 90% of the cost.

If an employer does not meet the £3 million pay wage threshold, but still wants to train an apprentice, they will now be obliged to pay 10% of the final negotated cost, known as ‘co-investment’.

Co-investment will also occur to any levy-paying employer who wants to invest more in apprenticeship training than they hold in their digital account.

In the first year of the new funding system, employers will need to pay their co-investment share directly to the Government-approved training providers. In time, the Government hope to gradually move to a system where the employer can pay this through their digital account.

Want to find out more?

Download the Omega Resource Group full guide

Omega Resource GroupOmega Resource Group


Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files

Please log in to leave a comment and share your views with other Cotswold Life visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Cotswold Life staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Cotswold Life account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

More from Cotswold Life

Neil and Alison Smith wanted a project, but then their old coach house began to reveal its interesting little glitches

Read more
Wednesday, October 17, 2018

Taking over the reins on a well-established 50 year old family business, third generation family member Matt Cleevely has taken his own passion for sustainability and put in place a business vision that marries the heritage of Cleevely Motors and a future commitment to all things electric

Read more
Wednesday, October 17, 2018

He quit his job with a few thousand pounds in savings and an empty garage. In less than a year, Nick Grey’s technology company Gtech was flying. Tanya Gledhill meets him

Read more
Tuesday, October 16, 2018

From food and farming champions to expert retailers, design houses to haulage companies, the old guard to the new kids on the block, we are lucky to count them among our numbers and applaud the contribution they make to the Cotswolds’ business landscape

Read more
Tuesday, October 16, 2018

Did you attend the opening of Lodders’ new office in Cheltenham? If so, you could be in our social photos...

Read more
Tuesday, October 16, 2018

“It’s important to keep investing in new equipment, not only to meet demand but to also maintain the high quality of our packaging that our customers rely on.”

Read more
Tuesday, October 16, 2018

Crowe, the national audit, tax, advisory and risk firm, has acquired a Gloucestershire accounting business that specialises in helping entrepreneurs

Read more
Tuesday, October 16, 2018

I send this postcard from Cirencester, complete with the discoveries and viewpoints from four members of my family – both the young and not so young

Read more
Tuesday, October 16, 2018

Of all the castles in the region, none have seen as much war, romance and royalty as Sudeley over its dramatic 1,000-year history. And with such a colourful and eventful past, it is easy to see why some people believe there could be spirits from bygone eras which still wander the halls and corridors to this day

Read more
Tuesday, October 16, 2018

‘If its autumn in Gloucestershire, then it must be time for Apple Day when we celebrate cider’

Read more
Monday, October 15, 2018

What started as a business ploy by one Cotswold firm has developed into an inspirational garden

Read more
Monday, October 15, 2018

The weekend is fast approaching and for those still deciding how to spend their Friday through to Sunday, we pick 5 of the best ways to spend your weekend in the Cotswolds

Read more
Monday, October 15, 2018

‘What meal would you choose, if you could only ever eat that meal three times a day forever and day?’

Read more
Friday, October 12, 2018

Here’s our pick of some of the very best chefs from our local pubs, restaurants and hotels in and around the Cotswolds and sharing their advice and tips on how they made themselves and their businesses successful

Read more

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

Our Privacy Policy

Latest Competitions & Offers

Topics of Interest

Food and Drink Directory A+ Education

Subscribe or buy a mag today

subscription ad

Local Business Directory

Property Search