At Summer Budget 2015 it was announced that the government would consult on creating three million new apprenticeships by 2020, funded by a levy on large employers.
Following the consultation, it has been confirmed that the apprenticeship levy will come into effect in April 2017, payable by UK employers. The levy will be 0.5% of the employer’s paybill (not including benefits in kind) and will be paid via PAYE. Each employer will receive an allowance of £15,000 to offset against the levy. The allowance means that the levy will only be payable on a paybill exceeding £3m per year.
Each employer will receive one allowance to offset against the levy. Connected persons rules will apply, restricting employers who operate multiple payrolls.
Given the allowance provided, the levy will be payable by less than 2% of the largest employers. Many of these employers have extensive apprenticeship programmes and will benefit from the levy.