New Apprenticeship Levy Scheme
This is a brief summary of how things are changing:
The new Apprenticeship levy scheme:
If PAYE turnover is over £3m then a 0.5% levy has to be paid in (with an initial tax allowance of £15k). this equates to no levy being paid on the first £3m of PAYE turnover
If PAYE turnover is less than £3m then no levy will be paid. However, any training will have to be paid for and subsidised by the government at a rate of 2:1 (ie. An electrician’s course will be £27k; £9k paid by the Company with £18k subsidised by the government)
Some of the new rules:
- The levy will have to be paid on a monthly basis into an account. If that fund is not claimed within 18 months then it will be lost and cannot be claimed back
- A Company can only claim back the amount they have paid in, no more. If they do any more training after their pot is empty then they will only get an additional 10% subsidy against it. Bearing in mind there is a £15k tax allowance, a Company with £5m PAYE turnover would have paid in £10k but have a pot of £25k
- The funds can ONLY be used for apprenticeship training
- This levy is going to be in addition to the CITB levy!
- To claim the funding, it will be split (For example with 16-18 year olds):
Recruit: £5,400
If a small business then an additional £2,700 can be claimed
If the apprentice completes and passes their course an additional £2,700 can be claimed
TOTAL: £10,800 per apprentice
NOTE: The apprentice has to pass by the 2nd attempt or the completion amount will not be paid
There are definite advantages of being below the £3m PAYE threshold:
- There is no additional levy to pay
- You can claim more per apprentice (£18k compared to £10,800)
- There is no limit to the number of apprentices as you have not got a pot that can dry up
As this is due to come in next year. The advice I would give is take on an apprentice this year especially if they are 16-18 as they will still be free.
