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Changes in Apprenticeship Levy is Live

From 6th April 2017, the changes to the way the government funds apprenticeships have come into effect. All employers with an annual pay bill over £3 million must contribute to a new Apprenticeship Levy. Funds to pay for apprenticeship training will be available through an online account system managed by the Apprenticeship Service.

According to the new changes, training providers will no longer get funding direct from the government, instead employers will negotiate contracts for the delivery of the apprenticeship training and evaluations they need, giving them more control in the process.

The funding agreement for apprentices who start an apprenticeship before 1st May 2017 will not be effected.

Here are listed the key points in Paying the Apprenticeship Levy:

  • All employers are now required to report and pay their levy to HMRC through the Pay as You Earn (PAYE) process.
  • The levy will not affect the funding for apprentices who started an apprenticeship programme before 1 May 2017.
  • All employers will receive an allowance of £15,000 to offset against the levy, which means the levy will only be payable on a pay bill in excess of £3 million in each year.
  • Employers will create an online account and the levy funds are paid into this.
  • Employers who are aged 19 will pay just 10 per cent of the cost of the apprenticeship training and the Government will pay the remaining 90 per cent.
  • The funding is credited to the online account on a monthly basis, with a 10 per cent top-up applied at the same time.
  • From 1st May 2017, the way apprenticeships are funded will change. Employers who pay the levy can access funds through their online service account to pay for apprenticeship training and assessment.
  • For non-levy businesses with less than 50 employees there will also be a new £1,000 incentive towards apprenticeships for taking on someone aged 16 to 18.

HMRC says that the new system will offer far more assurance by making incremental changes to tax payments. This will benefit likely eight million taxpayers who currently end the tax year having either over or under paid tax.

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