In April 2017 the government introduced the Apprenticeship Levy to all employers charged at 0.5% of an employer's pay bill. A HRMC allowance of £15,000 is applied to all employers, meaning only those with a payroll in excess of £3 million will have a levy allocation which can only be spent on apprenticeships. The government will also apply a 10% top up to levy paying employer's accounts ensuring employers can take out more than they put in. Levy contributions are made monthly and those not used expire after 24 months.
What counts as your pay bill?
Your pay bill will be based on the total amount of earnings subject to Class 1 secondary National Insurance Contributions (NICs). Although earnings below the secondary threshold are not counted when calculating an employer’s NICs, they will be included for the purposes of calculating the amount of levy the employer needs to pay.
Earnings include any remuneration or profit coming from employment, such as wages, bonuses, commissions, and pension contributions that you pay NICs on. We will not charge the levy on other payments such as benefits in kind, subject to Class 1A NICs.