If you have a PAYE bill of over £3 million, then you will start paying an additional tax on this in the form of an apprenticeship levy. This new levy comes into play from the 1st April, and many companies are still confused about how it will affect them. If you have a PAYE bill of less than £3 million, then you don’t need to worry. However, if your PAYE bill is over £3 million, you will be subject to a compulsory tax of 0.5% of your PAYE bill. In this article, we’ll be looking at how you can recover the funds you pay in to the apprenticeship levy.
Claiming your apprenticeship levy tax back
First things first. For those organisations that are subject to the apprenticeship levy, before you even open that company cheque book you should know that you’re entitled to a £15,000 training allowance each year. This means that when your apprenticeship levy is calculated you don’t pay the first £15,000. Once you’ve registered your company for the levy and paid what you owe, you will get a digital account. This digital account will provide you with access to the levy money that you have paid in as well as the government top up of 10%. This money can only be spent on providing training for new apprenticeships or enabling your current staff to further their development and certification through an apprenticeship. The funding cannot be used for anything else.
How the apprenticeship levy affects your organisation
What this means, if you’re a large organisation – is that you end up with a very sizable, ring-fenced budget for learning and development, helping to address a common HR bugbear in large organisations around insufficient training funds. Moreover, you can obtain further bonuses when you top up the fund. For every £1 you pay into the levy, you get a 10% bonus added on top by the government. With new reforms encouraging businesses to offer more apprenticeships, this fund provides the perfect opportunity to work with government-approved training providers to bring news skills on board that will help you meet the future demands of your business. For some, the idea of a compulsory levy might seem like bad news, but the reality is – by ring-fencing an L&D budget you’re future proofing your organisation through the acquisition of new talent and new skills. The new legislation means that, try as you might – there is no way out of getting out of paying the apprenticeship levy. The best option therefore, is to put plans in place to claim the money back by way of training for new and existing employees within your business. That’s where the London College of Apprenticeship Training (LCoAT) can help.
Developing an apprenticeship levy strategy
To get the maximum benefit from the apprenticeship levy, it’s important that your business plans ahead. Many organisations are not familiar, nor comfortable with the idea of using apprenticeships. There’s a common misconception that apprenticeships have to be given to young, school leavers at the very beginning of their careers – however this is not the case. Your existing employees can also embark on an apprenticeship to upskill in their current role or even advance into a leadership position or get a degree. By understanding the apprenticeship options open to your business, you can put a robust plan in place to maximise the usage of your levy to help your company achieve its short, mid and long term goals. We can this plan an Apprenticeship Levy Blueprint, and we design you a bespoke road map to help you get the best training without spending any more than is in your levy account. We tailor each plan to the organisation and cover the following important topics:
- Which apprenticeships you should use
- How to provide support for your apprenticeships
- How to help your apprentices achieve their goals
- How to manage the new apprenticeships without it affecting the performance of your business.
- How to recovery 100% of the levy you have paid
- Which approved apprenticeship training providers to use
Why use LCoAT?
The London College of Apprenticeship Training is a specialist apprenticeship provider. Unlike many other organisations who are generalist training companies, LCoAT only does apprenticeships. That means, without the distractions of other service offerings, we’re able to provide you with most comprehensive apprenticeship service available. We’ve worked with over 450 employers. 90% of which continue using our services today. Our knowledge of the new apprenticeship levy is extensive, and we’ve now built relationships with an additional 15 sub-contracted training providers to enable us to offer the broadest apprenticeship training portfolio. To learn more and to have your questions about the apprenticeship levy answered, contact us today on 020 3651 4747 or fill in the contact form on our website and we’ll be in touch shortly.