Andi Brown, director and founder of SAAF Education, a provider of financial management and business support services to schools, academies and multi-academy trusts, discusses what the national minimum wage increase and what the apprenticeship levy guidelines means for employers.

Apprenticeships provide employers with an opportunity to grow and strengthen their workforce with fresh insight and enthusiasm from the next generation of workers. To take advantage, employers need to stay up to speed with the latest legislative updates and developments.

Latest National Minimum Wage increase comes into force

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to earn by law.

From the start of October 2016, the NMW increased for all apprentices and workers under the age of 25.

The new rates, are as follows:

  • £7.20 per hour – 25 years old and over
  • £6.95 per hour – 21 to 24 years old
  • £5.55 per hour – 18 to 20 years old
  • £4 per hour – 16 to 17 years old
  • £3.40 - for apprentices in year one of their apprenticeship, including those aged over 19

New Apprenticeship Levy guidelines

In addition to the new NMW rates being released, the Apprentice Levy guidance has also been updated. This means that there will be changes to apprenticeship funding.

What is the Apprentice Levy?

The Apprentice Levy is a mechanism by which the government raises money to fund apprenticeship training across England, effective from 1st April 2017.

Apprenticeship funding will change as of 1st May 2017 and all employers will be subject to both the Apprentice Levy rules and framework of funding for apprenticeships.

How will you be charged and will you have to pay the Levy?

The Levy will be charged at a rate of 0.5% of an employer’s payroll if the value exceeds £3 million per annum. As such, the payroll value is to be defined as the total gross of all employees pay.

For example, if a company employed 200 employees and paid each employee £20,000 then the value of the payroll would be £4,000,000 and the company would be subject to the levy (£4,000,000 x 0.5% = £20,000).

If the employer is a local authority, Multi-Academy Trust, Charity or Connected Company, the combined value of all payrolls will be considered when assessing the liability for the Levy.

So, if 200 employees were split across connected, then each company would still be liable for the Levy even though each individual payroll does not exceed £3 million.

All employers will receive an allowance of £15,000 per annum that can be used to offset the levy charge. Using the previous example, the £20,000 would be reduced by £15,000. This means that only £5,000 would be due from the employer.

Advertisement

However, only one allowance will be given to each employer and not for each company or payroll.

Otherwise the allowance will be split into monthly installments of £1,250 and if the gross value of the payroll exceeds this amount then the levy will be charged at the 0.5%.

Once again using the previous example, if employees receive £20,000 per annum and are paid monthly, then they will receive £1666.66 per month. So, 200 employees will equate to: (200 x £1666.67) x 0.5% - £1250 allowance = £416.67 monthly levy charge.

What do employers gain from the levy?

If the employer is liable to the levy, the funds will be taken by HMRC as part of the PAYE, paid monthly and credited into a Digital Apprentice Service (DAS) account.

In addition to this, the government will pay 10% of the levy paid by the employer and the funds can be used as e-vouchers to pay for accredited apprentice training.

It’s important to note that employers will need to create a DAS account to ensure monies deducted by the levy can be credited to the account for use in funding Apprenticeships.

If the employer is not liable to pay the levy charge, as the payroll bill is less than £3 million, then the employer will not use the apprenticeship service until at least 2018, for which the government will provide further guidance.

However, the new apprenticeship funding system will take affect from May 2017, whereby, provided the training is approved by the apprenticeship service, then the government will contribute 90% of the cost training, leaving the employer to pay the final 10%.

For more information on these changes, connect with Andi on LinkedIn

You may also be interested in these articles:

Register, Login or Login with your Social Media account:


Advertisers

Newsroom Activity

Latest Education News

Further Education News

The FE News Channel gives you the latest education news and updates on emerging education strategies and the #FutureofEducation and the #FutureofWork.

Providing trustworthy and positive Further Education news and views since 2003, we are a digital news channel with a mixture of written word articles, podcasts and videos. Our specialisation is providing you with a mixture of the latest education news, our stance is always positive, sector building and sharing different perspectives and views from thought leaders, to provide you with a think tank of new ideas and solutions to bring the education sector together and come up with new innovative solutions and ideas.

FE News publish exclusive peer to peer thought leadership articles from our feature writers, as well as user generated content across our network of over 3000 Newsrooms, offering multiple sources of the latest education news across the Education and Employability sectors.

FE News also broadcast live events, podcasts with leading experts and thought leaders, webinars, video interviews and Further Education news bulletins so you receive the latest developments in Skills News and across the Apprenticeship, Further Education and Employability sectors.

Every week FE News has over 200 articles and new pieces of content per week. We are a news channel providing the latest Further Education News, giving insight from multiple sources on the latest education policy developments, latest strategies, through to our thought leaders who provide blue sky thinking strategy, best practice and innovation to help look into the future developments for education and the future of work.

In May 2020, FE News had over 120,000 unique visitors according to Google Analytics and over 200 new pieces of news content every week, from thought leadership articles, to the latest education news via written word, podcasts, video to press releases from across the sector.

We thought it would be helpful to explain how we tier our latest education news content and how you can get involved and understand how you can read the latest daily Further Education news and how we structure our FE Week of content:

Main Features

Our main features are exclusive and are thought leadership articles and blue sky thinking with experts writing peer to peer news articles about the future of education and the future of work. The focus is solution led thought leadership, sharing best practice, innovation and emerging strategy. These are often articles about the future of education and the future of work, they often then create future education news articles. We limit our main features to a maximum of 20 per week, as they are often about new concepts and new thought processes. Our main features are also exclusive articles responding to the latest education news, maybe an insight from an expert into a policy announcement or response to an education think tank report or a white paper.

FE Voices

FE Voices was originally set up as a section on FE News to give a voice back to the sector. As we now have over 3,000 newsrooms and contributors, FE Voices are usually thought leadership articles, they don’t necessarily have to be exclusive, but usually are, they are slightly shorter than Main Features. FE Voices can include more mixed media with the Further Education News articles, such as embedded podcasts and videos. Our sector response articles asking for different comments and opinions to education policy announcements or responding to a report of white paper are usually held in the FE Voices section. If we have a live podcast in an evening or a radio show such as SkillsWorldLive radio show, the next morning we place the FE podcast recording in the FE Voices section.

Sector News

In sector news we have a blend of content from Press Releases, education resources, reports, education research, white papers from a range of contributors. We have a lot of positive education news articles from colleges, awarding organisations and Apprenticeship Training Providers, press releases from DfE to Think Tanks giving the overview of a report, through to helpful resources to help you with delivering education strategies to your learners and students.

Podcasts

We have a range of education podcasts on FE News, from hour long full production FE podcasts such as SkillsWorldLive in conjunction with the Federation of Awarding Bodies, to weekly podcasts from experts and thought leaders, providing advice and guidance to leaders. FE News also record podcasts at conferences and events, giving you one on one podcasts with education and skills experts on the latest strategies and developments.

We have over 150 education podcasts on FE News, ranging from EdTech podcasts with experts discussing Education 4.0 and how technology is complimenting and transforming education, to podcasts with experts discussing education research, the future of work, how to develop skills systems for jobs of the future to interviews with the Apprenticeship and Skills Minister.

We record our own exclusive FE News podcasts, work in conjunction with sector partners such as FAB to create weekly podcasts and daily education podcasts, through to working with sector leaders creating exclusive education news podcasts.

Education Video Interviews

FE News have over 700 FE Video interviews and have been recording education video interviews with experts for over 12 years. These are usually vox pop video interviews with experts across education and work, discussing blue sky thinking ideas and views about the future of education and work.

Events

FE News has a free events calendar to check out the latest conferences, webinars and events to keep up to date with the latest education news and strategies.

FE Newsrooms

The FE Newsroom is home to your content if you are a FE News contributor. It also help the audience develop relationship with either you as an individual or your organisation as they can click through and ‘box set’ consume all of your previous thought leadership articles, latest education news press releases, videos and education podcasts.

Do you want to contribute, share your ideas or vision or share a press release?

If you want to write a thought leadership article, share your ideas and vision for the future of education or the future of work, write a press release sharing the latest education news or contribute to a podcast, first of all you need to set up a FE Newsroom login (which is free): once the team have approved your newsroom (all content, newsrooms are all approved by a member of the FE News team- no robots are used in this process!), you can then start adding content (again all articles, videos and podcasts are all approved by the FE News editorial team before they go live on FE News). As all newsrooms and content are approved by the FE News team, there will be a slight delay on the team being able to review and approve content.

 RSS IconRSS Feed Selection Page