THE SYSCO GROUP
Information
The Apprenticeship Levy
As part of the Apprenticeship Reforms in April 2017, a levy was placed on large employers with wage bills in excess of £3million to help pay for Apprenticeship Training whilst a co-contribution model was introduced for SME employers.
The government has introduced the apprenticeship levy, a compulsory tax on employers to help fund the development and delivery of apprenticeships, with the aim of improving the quality and quantity of those available.
Employers fall into one of two groups: levy payers and non-levy payers. Employers with a paybill of more than £3 million are required to pay the levy – whether they employ an apprentice or not. Your paybill includes all payments to employees that are subject to Class 1 secondary National Insurance Contributions, such as wages, bonuses and commission. We have put together the following information to help you understand the levy’s implications for your business.
The Apprenticeship Levy and the Implications for Levy Paying Employers
This new funding system supports the English apprenticeship funding system only and applies to companies with wage bills of over £3million.
Scotland, Wales and Northern Ireland have their own arrangements for supporting Employers to access Apprenticeships, through their devolved Assembly’s.
The Levy forms part of a broader programme of apprenticeship reforms that the Government is introducing. The Government believe that Apprenticeships are good for business and a great way to develop the skills of the workforce both now and in the future. The aim of the Apprenticeship reforms is to deliver more Apprenticeships of a better quality to help improve economic productivity.
Details…
- Employers will pay levy contributions to HMRC on a monthly basis alongside usual PAYE payments.
- Levy contributions are placed in an account on the Digital Apprenticeship Service online portal.
- The employer can access the funds in this account to purchase Apprenticeships training and assessment for their staff.
- If the employer decides not to purchase Apprenticeship training, levy contributions will expire 24 months after they are deposited. e.g. April 2017 contributions will expire in April 2019.
- Contributions can only be used to pay for the training and assessment of Apprentices who work in England. Wales, Scotland and Northern Ireland are subject to different systems.
- The Government will automatically top up an employers levy contributions by 10% in order that employers receive more funding for training than they pay in.
- From April 2017 the Digital Apprenticeship Service will provide employers with information on: Available Apprenticeships; The sourcing of approved training providers and colleges; Advertising Apprenticeship vacancies; Paying for Apprenticeship training using levy funds
- The Government are simplifying Apprenticeship funding by placing every Apprenticeship into one of 15 funding bands, ranging from £1,500 to £27,000.
- All employers will receive an additional support payment of £1,000 for employing an apprentice who is aged between 16 and 18. The training provider that the employer works with to deliver the Apprenticeship will also receive an incentive payment of £1,000.
- Support payments of £1,000 will also be available to employers who take on Apprentices aged between 19 and 24 who were formerly in the care of a local authority or who have an Education Plan.
Using your apprenticeship funding
The levy payments will go into the new online Apprenticeship Service, which will enable you to manage your apprenticeship funding and delivery through a virtual account. You’ll be able to see how much is in your account and allocate payments to providers of government-approved apprenticeships.
Sysco will work with you to agree on an apprenticeship programme suitable for your business. The levy can be used to pay for the End Point Assessments, but not the registration or certification of non-mandatory qualifications.
The Apprenticeship Levy and the Implications for SME Employers
SME Employers with wage bills of less than £3million will also be affected by the reforms being brought in, including a requirement that in some cases employers will be required to contribute to the cost of training and assessment
By 2020, all employers will be able to use the digital apprenticeship service to pay for training and assessment for apprenticeships. Until then, non-levy paying SME employers will continue to negotiate and agree their apprenticeship programme with their chosen training provider.
Details…
- SME employers will have to make a cash contribution towards the cost of training and assessing an Apprentice. The Government will pay 95% of the cost with the employer paying 5%.
- However, if the employer has less than 50 staff and they recruit a 16 to 18 year old Apprentice, the Government will pay 100% of the cost of the training and assessment.
- The Government are simplifying Apprenticeship funding by placing every Apprenticeship into one of 15 funding bands, ranging from £1,500 to £27,000.
- This means that employer contributions could be as little as £150 and can go to a maximum of £2,700, depending on the type and level of the Apprenticeship training.
- All employers, regardless of size will receive an additional support payment of £1,000 for employing an apprentice who is aged between 16 and 18, even where the Government has funded 100% of the training and assessment costs.
- The training provider that the employer works with to deliver the Apprenticeship will also receive an incentive payment of £1,000 from the Government for delivering Apprenticeship training for a 16 to 18 year old.
- Support payments of £1,000 will also be available to employers who take on Apprentices aged between 19 and 24 who were formerly in the care of a local authority or who have an Education Plan.