As part of the Comprehensive Spending Review on 25 November 2015, the Government provided further information on plans to introduce an Apprenticeship Levy. The Chancellor announced that the new levy, which will take effect in April 2017, would be set at 0.5% of an employer’s wage bill and would be collected monthly through the PAYE system.

Each employer will receive an allowance of £15,000 to offset against their Apprenticeship Levy payment. In practice, this means that the Apprenticeship Levy will only be paid by businesses whose annual wage bills are in excess of £3 million. Smaller employers will not pay the Apprenticeship Levy and will continue to be able to access Government support for apprenticeships.

In basic terms, the company's payment will be based on their PAYE wage bill then deduct £15,000:

Example 

Employer of 250 employees, each with a gross salary of £20,000:

Paybill: 250 x £20,000 = £5,000,000

Levy sum: 0.5% x £5,000,000 = £25,000

Allowance: £25,000 - £15,000 = £10,000 annual levy payment

 

Employer of 100 employees, each with a gross salary of £20,000 would pay:

Paybill: 100 x £20,000 = £2,000,000

Levy sum: 0.5% x £2,000,000 = £10,000

Allowance: £10,000 - £15,000 = £0 annual levy payment


The new charge will be imposed from April 2017 and help ensure that big business shoulders the cost of training workers, George Osborne said. But business groups have described the levy as a new "payroll tax".