The apprenticeship levy

2 minutes to read

The apprenticeship levy comes into force on 6th April 2017. This is a new tax being introduced by the government and it’s one of several changes happening at the start of the new tax year.

How much is the apprenticeship levy?

The amount is equal to 0.5% of each employee’s taxable income and is used to pay for apprenticeships in the UK country where that employee lives. However, there is a government allowance which means that no apprenticeship levy is owed on the first £250,000 that our employees collectively earn each month,

How is the apprenticeship levy funded?

The apprenticeship levy is included in the daily or hourly rate agreed with your agency for your assignments. In that respect, it’s similar to Employer’s National Insurance (ERNI). So, starting from 6th April, both the apprenticeship levy and ERNI will be included on your pay advice slips under the heading ‘employer’s outgoings’. We recommend learning more about how your take-home pay is calculated, and how the levy fits into it.

Remember, the apprenticeship levy is one of several changes happening in April. Each of these changes will have differing effects on your take-home pay and it’s very likely that you’ll see an increase overall.

What about the government allowance?

We haven’t forgotten about the government allowance – no apprenticeship levy is owed on the first £250,000 that our employees collectively earn each month. We want you to get the benefit of this allowance but in practice, when we have new employees joining every day and people earning different amounts, it’s almost impossible to accurately allocate it between everyone.

The only practical option is to collect the levy on all income, including the first £250K. Therefore, each month we’ll end up with £1,250 more than we need to pay the levy (this is 0.5% of £250K). It equates to £15,000 each year.

Per person this is pennies, but it adds up to a significant sum.

We don’t want to keep this money, so we’re ring-fencing it to ensure we spend it in a way that our community are happy with.

£15,000 – what would you like us to do with it?

We need your opinion – what would you like us to do with the £15,000? Some options we’ve thought of are:

  • Spend it on contractor CPD courses
  • One employee wins a £1,250 prize every month
  • Donate it all to charity

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