09 Aug 2017 5:09 PM

It’s a common misconception that companies are liable to pay the Apprentice Levy only if employing apprentices, but this is not the case. This is a question that I am often asked by employers, and there can be some confusion for employers as the payrolls of connected entities need to also be considered.

Here are three questions employers frequently ask me about the Apprenticeship Levy:


1.Who needs to pay the Apprenticeship Levy?

As an employer, you have to pay Apprenticeship Levy each month from 6 April 2017 if you:

  • have an annual pay bill of more than £3 million



2. How do I calculate my annual pay bill?

Your annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions (NICs) such as wages, bonuses and commissions. You must include payments to:

Your pay bill does not  include:

  • earnings of employees under the age of 16
  • earnings of employees who aren’t subject to UK NICs legislation
  • earnings on which Class 1A NICs are payable, such as benefits in kind


3. How much do I need to pay?

The amount due is 0.5% of your pay bill, after the Apprenticeship Levy allowance has been taken into consideration.


What you need to know about the Apprenticeship Levy Allowance

  1. Employers who aren’t connected to another company or charity will have an Apprenticeship Levy allowance of £15,000 each year.
  2. The Apprenticeship Levy allowance reduces the amount of Apprenticeship Levy you have to pay by £15,000 across the year.
  3. You can not carry over any unused Apprenticeship Levy allowance into the next tax year.
  4. Connected companies or charities will only have one £15,000 allowance to share between them.
  5. If you start or stop being an employer part way through the tax year you can use your full annual Apprenticeship Levy allowance against the amount of the levy that you owe.
  6. Levy paying employers can manage the set up and funding of their Apprentices on line through the Apprenticeship service.


What should I do now?

All levy paying employers should register with the Apprenticeship Service


If you have any questions on the Apprenticeship Levy, or any payroll related matter, please do contact me.