REC business partner Solvo Vir offers advice on How to Calculate your Apprenticeship Levy Contribution

Filed under Business partner update

Wednesday, 09 May 2018

Research carried out earlier this year by recruitment training provider, Solvo Vir showed that although it’s a year since the government’s Apprenticeship Levy scheme came into force, many businesses are not yet familiar with it. There is still a lack of understanding about how it works, how much should be paid and about government top-up funding. 

Solvo Vir Apprenticeship Levy Calculator image

With this in mind, Solvo Vir has created a simple Apprenticeship Levy Calculator. If you’re confused about how much your business should be paying or want to know how many apprenticeships your recruitment agency or department can fund, then the Apprenticeship Levy Calculator is an easy way to find out. 

How to calculate your Apprenticeship Levy payments

The levy is applied to businesses according to the size of their annual wages bill. To be eligible, the annual PAYE bill has to exceed £3m. The calculator uses wage bill size to demonstrate a business’ annual levy deduction once the government ‘buffer’ has been applied. Then, crucially, you can see how much you have in the pot to invest in apprenticeships. This amount comprises a business’ own contributions plus the 10% top-up that the government provides.

Once you’ve seen how much you have available to invest in apprenticeship training, the next stage will show you how many apprenticeships of different types and levels you could fund. 

Why are businesses not using the levy?

There are a number of reasons why businesses may not be as clued up on the apprenticeship levy as perhaps they could be. In some cases, business owners are paying the levy but not using it to fund training because they are unaware of the range of possibilities. For example, they might not realise that in December 2017, pricing for recruitment industry apprenticeships was officially approved. This means that agency and in-house recruiters can gain new skills and an industry-recognised qualification, all funded through the levy. 

There is still a lack of understanding in the wider business community over the ways in which apprenticeship training can benefit a business. For example, it’s a common misconception that apprentices are newly hired staff, fresh from school or college. In fact, apprenticeships can be used to upskill staff, including managers, of any age. 

Because the levy works on a fixed amount (wages bills of £3million or higher) more companies will become eligible over time. A business that wasn’t eligible when the levy was introduced but has grown in the twelve months or has seen wages rise, could now find itself needing to pay the levy. 

What about apprenticeship funding for smaller businesses?

Smaller businesses, with an annual PAYE bill of under £3m, do not currently need to pay the levy. However, generous government funding is available to SMEs, meaning the business only pays 10% of the cost of the apprenticeship training. This arrangement, known as ‘co-funding’ sees the government paying the lion share of the cost of the apprenticeship training. 

Try the Apprenticeship Levy calculator to quickly and simply find out whether your business needs to pay, and how much you will be available to you to invest in upskilling staff. 

Contact: Dom Abubakar

Phone: 0330 0539140

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