The government has published the details of its much-anticipated apprenticeships levy.
Released last week, the draft legislation outlines how the levy will work and be applied, with explanatory notes providing clarity on its main points.
Coming into effect from 6 April 2017, the levy will be charged at a rate of 0.5% of an employer’s paybill.
Less than 2 per cent will pay
It will be paid only on annual paybills of £3 million and above – this represents less than 2 per cent of employers. All sectors will be subject to the tax.
The payments will be collected through Pay as You Earn (PAYE), alongside income tax and National Insurance. ‘Paybill’ will be based on total employee earnings subject to Class 1 secondary NICs.
Each employer will receive an allowance of £15,000 to offset against their levy payment.
Set-up costs
The policy paper said: “The levy will help to support quality training, and employers who are committed to training will be able to get more out than they pay in levy.
“For employers paying the levy, the measure is expected to have some impact on administration costs and the impact will vary by employer, depending on the size of their paybill. The policy intention is that they will calculate and pay the levy on a monthly basis.”
It is expected that the cost to HMRC for setting up the levy will reach £7 million.
