Carter Jonas
Carter Jonas

Apprenticeship levy arrival

The apprenticeship levy scheduled to launch from 6 April 2017 will affect many farming businesses. Every business with a payroll will have to submit returns to HMRC, however, any with a total annual payroll below £3 million are unlikely to have to pay any levy.

Every employer will have to report to HMRC for calculation for the compulsory levy to fund apprenticeships across the UK. The money will build a central fund topped up by the Government to help pay for both existing apprenticeship schemes and the previous Government’s pledge of three million new apprenticeships in England by 2020.

All employers will owe the equivalent to 0.5% of their total wage bill. In practice, the scheme’s offset allowance of £15,000 means that only employers with an annual wage bill exceeding £3 million will have to pay the levy. The caveat is that this £15,000 allowance has the potential to be lost as a penalty if a business fails to submit levy calculations through PAYE, even when the business is below the £3 million threshold and would not otherwise have had to pay.

Access to apprenticeship funding for businesses is also changing. In England, a Digital Apprenticeship Service (DAS) is due to be set up from this October and UK employers with employees in England who exceed the £3 million threshold, thus paying the levy, will have access to funding through their own personal accounts.

Employers below threshold and therefore not paying the levy will not have access to levy funds but can still access the DAS, making contributions to the cost of apprenticeships and in return gaining access to Government funding.

How reporting under PAYE will work, the method of funding access in the rest of the UK, and other details are yet to be finalised. It was anticipated that further guidance would be issued in June but with the new Government concentrating on the unanticipated Brexit result the timetable has slipped although, as a domestic measure, Brexit is unlikely to impact on the date when the levy comes into force or its implementation.

All businesses need to be alert to the scheme and to prepare a reporting regime for HMRC.

Further details of the scheme can be accessed here.

Tim Jones

Tim JonesFRICS

Partner - Head of Rural Division

Tim is head of the firm's Rural Division and of the Cambridge office, although he spends a considerable amount of time in London.  He has over 20 years experience in advising institutional and pri...

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