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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

SEPTEMBER 2016 Lessons Learned - the Apprenticeship Levy

All businesses in the UK with a wage bill exceeding £3 million are to face an additional levy from April 2017. Launched by the UK Government the Apprenticeship Levy is to apply to all businesses exceeding the wage bill criteria regardless of whether or not they already employ apprentices.

The UK Government estimates that only 2% of UK businesses will pay the levy which is forecast to raise up to £3 billion by 2019. Of the £3 billion, £2,5 billion would be spent in England and the remaining £500 million distributed between Scotland, Wales and Northern Ireland. For companies working across different countries, the appropriate percentage will be allocated to each location.

Public sector organisations will also be liable for the levy if they meet the criteria in addition to having over 2% of their workforce as apprentices.

Supporting Apprentices

In England it has been agreed that a digital voucher system will be used to administer funding for training. This can be accessed by business that do not pay the levy such as SMEs. However, the Scottish Government has yet to provide detail on how the fund will be administered to support training and skills development in Scotland.

The Scottish Government conducted a consultation on the allocation of the levy in August and announced in their most recent Programme for Government that a distinctly Scottish approach on the levy will be developed, “supporting apprenticeships and wider skills development and driving closer engagement with industry in our efforts to enhance productivity and economic growth”.

The Scottish Government approach is to be announced in their upcoming spending plans ahead of the levy start date in April 2017.

Business Cost

The levy will be payable by employers in the UK and amounts to 0.5% of the payroll cost through Pay As You Earn and alongside Income Tax and National Insurance. Employers will receive an allowance for the first £15,000 of the levy meaning that the levy is only applicable on the wage bill above the £3 million threshold.

For example, a company with 250 employees each with a gross salary of £20,000 has a wage bill of £5 million. The applicable levy at 0.5% is £25,000 and after the £15,000 allowance the business will face an annual levy charge of £10,000.

We would welcome the opportunity to keep you up to date with all of the latest developments with the apprenticeship levy and if you would like further information on this in the meantime, please email Louise McCosh, Director of HR Services  l.mccosh@frenchduncan.co.uk or call 0141 221 2984.