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**Updated on 12 January 2017**
In order to help meet its target of 3 million apprentices by 2020, the government is introducing an Apprenticeship Levy (i.e. a tax) on all large employers (defined as those employers with a pay-bill of over £3m). This includes schools and academies.
With effect from 1st April 2017 with the first payments due in May 2017.
0.5% of the employer’s pay-bill. Every employer will receive an allowance of £15k to offset against the amount they owe.
The local authority remains the employer of staff in maintained schools (community and voluntary controlled). Those schools will be counted along with the LA workforce pay-bill.
Voluntary aided schools and academies will only be affected if their pay bill is greater than £3m.
If the school is part to a pooled PAYE scheme – i.e. utilising a single PAYE reference to report to HMRC they should arrange to split from the pooled PAYE scheme and set up their own PAYE scheme prior to April 2017. Further guidance is available from the payroll provider.
Schools that are part of a MAT will be subject to the levy and the public sector target if the MAT has in excess of 250 employees. Only one £15k allowance will be allowed to be offset against the MAT.
MATs in scope for the levy and the target will also need to calculate the number of apprentices that they are expected to take on.
The expectation is that the levy will be calculated and collected via the PAYE system.
The school’s payroll provider will liaise with the local authority to establish an acceptable process. HMRC and the DfE are expected to publish further guidance on this subject.
The contributions go into an HMRC digital apprenticeship account.
This account will be used to pay for apprenticeship training and assessment.
The government will top up by 10%, so for every £1 in the digital account the government will add 10 pence.
Training and assessment costs for apprentices.
No the Apprenticeship Levy cannot be used for salary costs.
No. Apprentices accepted on an apprenticeship programme prior to April 2017 will be funded under the current terms and conditions.
No. An apprenticeship may be set up for an existing employee.