.png)
In recent years, the UK government has taken significant steps to invest in skills development and to promote workforce training. One such initiative is the Apprenticeship Levy, a key component of the government's apprenticeship initiative.
Designed to encourage employers to invest in apprenticeships, the levy has been instrumental in driving up the number of apprenticeships across various industries. Despite all of these benefits, many employers don’t know what the levy actually is.
What is the Apprenticeship Levy?
The Apprenticeship Levy is essentially a tax imposed on larger employers in the UK to help fund apprenticeship training and development. Introduced on 6th April 2017, it was a key part of the government's plan to create three million new apprenticeships by the year 2020. The levy is administered by the HM Revenue and Customs (HMRC) and applies to businesses, public sector organisations, and charities whose annual pay bill exceeds a certain threshold. To find out if you are eligible, visit the government website.
How Does the Levy Work?
Employers that fall within the scope of the Apprenticeship Levy must pay 0.5% of their annual pay bill as the levy amount. The pay bill includes the total earnings of their employees who are subject to Class 1 National Insurance contributions. Employers receive an allowance of £15,000 per year to offset the levy payment, which means the levy only applies to businesses with an annual pay bill above this threshold.
The funds collected through the apprenticeship levy are then credited to the employer's Digital Apprenticeship Service (DAS) account. The DAS account acts as an online portal where employers can access and manage their levy funds, as well as find apprenticeship training providers and choose apprenticeship programs that suit their needs.
How Can the Levy Benefit an Employer?
The apprenticeship levy gives employers the opportunity to invest in skill development within their workforce. By offering apprenticeships, employers can nurture a highly skilled and specialised talent pool, tailored to meet the specific needs of their industry. Also, employers who contribute to the apprenticeship levy can access the funds they have accrued to cover the costs of apprenticeship training and end-point assessment for apprentices within their organisation. This ensures that employers get back more than they put into the levy, making apprenticeships a cost-effective solution for employee training and development.
Apprenticeships are a fantastic way to expand your business whilst also giving local people the opportunity to enhance their careers.
Comments