Introduced by the UK government in 2017, the National Apprenticeship Levy is a scheme whereby employers who have an annual payroll of £3 million or over must contribute towards apprenticeships, or future apprenticeships, facilitated in their organisation.
If an organisation is entitled to contribute to the scheme, no levy will be paid on the first £3 million of their payroll. Above this level, the levy will be paid at a rate of 0.5% of the payroll cost through PAYE (alongside income tax and NI).
As an example, this means that an organisation who has a payroll of £5 million will not pay levy on the first £3 million, however will pay 0.5% on the remaining £2 million. This sum then becomes the levy fund for that employer to use for apprenticeship training in their organisation.
Employers that are levy payers are required to pay the salary costs for apprentices, however the costs for training are supported through the levy fund.
Employers that are non-levy payers are still required to pay the salary costs for apprentices and are also required to pay a 5% co-investment of the training cost.
Costs for training will be determined by using a skills scan which will be carried out with the learners, considering their experience and current knowledge. This will determine the cost of the apprenticeship.