Apprenticeship levy funding deal

The UK government has agreed a new funding deal for the upcoming apprenticeship levy for Scotland, Wales and Northern Ireland. The government has confirmed that Scotland will get £221m, Wales £128m and Northern Ireland £76m in the first year of the levy in 2017-18. These calculations are a population-based share of the proceeds in line with the UK’s general approach for sharing UK-wide revenues.

The devolved administrations will be able to decide how to allocate this funding as part of their devolved responsibilities. The agreement does not change the way the scheme will work in England where the levy will fund increased and improved apprenticeship training.

The new apprenticeship levy will commence on 6 April 2017 at a rate of 0.5% of the employer’s ‘pay bill’. To exclude smaller employers a £15,000 allowance can be claimed. This will mean that only employers operating in the UK with a pay bill in excess of £3 million will contribute to the levy. To keep the process as simple as possible the 'pay bill' will be based on total employee earnings subject to Class 1 secondary NICs , including all earnings below the Secondary Threshold.

The Government will collect the levy via Pay As You Earn (PAYE) and it will be payable alongside Income Tax and National Insurance. Levy paying employers in England will receive funds in a new digital apprenticeship service account, which can then be used to pay for apprenticeships. All employers, including those who are not subject to the levy will still get a government contribution to the training and assessment of their apprentices.

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