The Apprenticeship Levy – in particular how it is being applied by Umbrella Companies – is a complex piece of legislation, and one that is causing considerable confusion amongst some in the industry.
But have Unite got this one wrong? Should the question not be one of Umbrella Company compliance, but of the restrictive nature of the laws that surround the Apprenticeship Levy instead?
DID YOU KNOW … Whilst the levy is not paid on the first £3m of payroll, if the payroll of individual companies is linked by a group structure (company unit), the allowance of £15,000 – or 0.5% of £3m – will only be applied once.
Four Fast Facts about the Apprenticeship Levy:
- The levy was introduced back in April 2017 and means that all companies whose annual wage bill exceeds £3m are expected to pay ½ a per cent of their payroll costs to HMRC.
- The money is earmarked for the training of apprentices, with the idea being that those employers who commit to training will be able to get back more than they put in by training sufficient numbers of apprentices.
- The levy is payable through PAYE and is to be paid alongside Income Tax and National Insurance contributions.
- Each employer (including those who operate multiple payrolls) receives one annual allowance of £15,000 to offset against their levy payment.
- An individual cannot work more than 40 hours per week, despite the fact that a temporary worker’s weekly hours often exceed this limit. They may need the flexibility to work more as and when the work demands.
- 20% of an individual’s paid weekly hours must be reserved for training or study, posing the question; how many companies would pay for a contractor or temporary worker to develop their skillset, with the likelihood being that they’ll utilise those subsidised attributes elsewhere?
- As a minimum, apprenticeships must last for at least one year and one day, making it difficult for those whose temporary contract falls within this time frame. By providing continuity of employment, a compliant Umbrella Company would certainly be able to help with this.
Read more on umbrella companies and the apprenticesihp levyRead our blog for up to date advice and guidance, or get in touch with any questions.
Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.
His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.
He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.