As your organisation grows, it’s essential to invest in the talented people that will continue to drive progress. The apprenticeship levy provides a unique opportunity to do this from the ground up by funding apprenticeship training.
If you’ve recently started paying into the levy, it can be a confusing topic to get your head around. Here are our answers to four key questions that you may be asking as a new levy payer:
What is the levy?
To bridge the digital skills gap, the government have placed importance on developing practical skills within the UK workforce. The levy came into effect in 2017 as a way to encourage large employers to nurture their own skilled workers.
In the two years since, many employers have chosen to embrace the levy by using it as a means to bring in new talent and provide additional training for their staff. For a more detailed background on the legislation behind the apprenticeship levy, click here.
How do I work out how much I need to pay?
Payable to the HMRC, the levy is charged at a rate of 0.5% of your pay bill. There is an allowance of £15,000 that reduces the amount payable over a year. This means that the levy only applies to anything over £3 million from your pay bill. The levy is a monthly deduction, so in reality, these costs will be taken in any month where your pay bill is over £250,000.
You can use our handy levy calculator to calculate the amount your organisation will pay each month. You’ll need to have a rough idea of your annual pay bill and percentage of staff that live in England.
What can I spend levy funds on?
Levy funds can only be used to pay for apprenticeship training. Additional associated costs such as wages, travel and equipment cannot be paid for using levy funds. In addition to the money you’ve paid into the levy, you’ll also receive a 10% government top up to spend on apprenticeships.
Baltic specialise in providing technical apprenticeship training in IT, software development and digital marketing. These programmes can be used to recruit new members of staff or to develop the skills of your current workforce.
How do I access my levy funds?
Your funds can be accessed through your apprenticeship service account. You can use this online service to view your available funds, manage your apprentices and pay your training provider. The apprenticeship service account only displays funds available for employees based in England, as the levy is a devolved policy. If you have employees based elsewhere in the UK, these funds will be managed separately.
After 24 months, your levy funds will start to expire on a monthly rolling basis. Start making the most of them today by registering for your apprenticeship service account here.
For more advice and guidance on the apprenticeship levy, click here, or get in touch.