Employers who have a wage bill of £3 million or more will make their first payment of the UK-wide apprenticeship levy this month. The levy is payable by private, public and voluntary sector employers at the rate of 0.5% of their total wage bill, subject to annual ‘levy allowance’ of £15,000 per year. The levy will be paid direct to HMRC through the usual monthly PAYE process.
Whilst employers north and south of the border will pay the levy in the same way, how the money will be used in Scotland and England will differ. Employers operating across the UK will pay a single levy, but the money will be allocated to each relevant apprenticeship scheme accordingly. The levy will also be administered separately in Wales and Northern Ireland.
In England, each employer’s levy contributions will be held in their own digital account, with the government adding a 10% ‘top up’ to the account each month. The account funds can then be used for apprenticeship training and assessments via an approved provider up to a certain level (with employers making up the difference, if any). Employers will not be allowed to use the funds to pay for other apprenticeship costs, such as wages, expenses, licenses to practice, or setting up their own apprenticeship or work placement schemes. The accounts operate on a ‘use or lose it’ basis and unused funds will expire after 24 months. Non-levy paying employers will be asked to co-invest, with employers paying 10% of the cost against the government’s 90% contribution, up to certain maximum limits.
In Scotland, the money will be held in a centralised pot and is intended to be used to fund Modern Apprenticeships and a new Workforce Development Fund aimed at helping employers to up-skill and re-skill their existing workforce. All employers will have access to funding, even if they are not required to pay the levy because they don’t meet the wage bill threshold. The Scottish Government has commented that they were not consulted on the introduction of the apprenticeship levy so appear to be playing catch-up to some extent. They aim to have firm arrangements in place for administering the new funding by autumn this year. Eligible employers in Scotland will continue to pay the levy in the meantime.