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Apprenticeship Levy and gender pay gap update for charities

Are you employing Apprentices or considering employing Apprentices?

From April 2017, the Apprenticeship Levy affects all employers in the UK. The levy is chargeable at 0.5% of your annual pay bill (the amount on which you pay Class 1 secondary NICs). However, an annual levy allowance of £15,000 means that you will only be required to report and pay the levy if your annual pay bill is over £3 million.

Whether you are required to pay the Apprenticeship Levy or not the government will provide help towards your training and assessment costs when you employ an Apprentice. It is therefore important to review the rules to ensure that you are making best use of the funds available. There are over 750 training courses which qualify for funding across the full spectrum of British industry.

Paying the Apprenticeship Levy

The levy is paid as part of your PAYE remittance and is recorded on the payroll through Real Time Information (RTI).

The levy is held within a special account which can then be drawn on by employers to pay for apprentice training and assessment costs (not wages or salaries). An additional 10% of what you pay is contributed by the government.

If the organisation is connected with another entity (ie the entities are connected for Employment Allowance purposes) you need to aggregate the pay bills to check if the entities are affected by the levy. Where entities are connected, they can decide how to split the £15,000 levy allowance between them.

Employers in England can draw on the levy they pay from May 2017. Apprenticeship Levy payers will need to register with the Apprenticeship Service and create an Apprenticeship Account. The account will record the levy you have paid, enable you to manage your apprentices, as well as choose and pay training providers. Please be aware, funds that you don’t use expire after 24 months.

Although employers in Scotland, Wales and Northern Ireland are being supported in different ways, they must still pay the Levy, but they will not be able to draw individually on the funds they have paid. The support that they will receive is yet to be announced.

Not paying the Apprenticeship Levy? – You can still benefit

The government will pay 90% of your apprenticeship training and assessment costs (up to the maximum amount of government funding available for that apprenticeship) and you will only pay a 10% contribution to your chosen training provider.

If your organisation has fewer than 50 employees, the government will pay 100% of your training and assessment costs for apprentices aged 16-18 and for those aged 19-24 formerly in care or with a local authority education, health and care plan.

Non-levy payers will pay the training provider direct for their portion of the training fees and the training provider will reclaim the balance from the Government.

From 2018 you will be able to open an Apprenticeship account.

Further information

For further information, please contact Adrian Hulme on 0114 2667171.

Alternatively, HMRC have published a helpful guide at https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work

Mind the gender pay gap

From April 2017 employers with 250 or more employees are required to publish details every year showing how large the pay gap is between their male and female employees.

The details must be published on the employer’s own website and on a government site by 5 April 2018. The information will be publicly available.

Part-time employees, people who are classed as workers and some self-employed people, (where they have to personally perform the work), will count towards the 250 total.

Six measures of the pay gap must be reported annually and signed off as accurate in a statement by an appropriate person within the business. Employers are allowed to add a narrative to explain the reasons behind any difference and actions taken to tackle any pay gap.

All the calculations are based on the payroll as at 5 April each year and employers have one year to comply with the gender pay gap reporting obligations.

The first report is based on the payroll at 5 April 2017 and must be published by 5 April 2018.

What are the calculations?

  • average gender pay gap as a mean average;
  • average gender pay gap as a median average;
  • average bonus gender pay gap as a mean average;
  • average bonus gender pay gap as a median average;
  • proportion of males receiving a bonus payment and proportion of females receiving a bonus payment; and
  • proportion of males and females when divided into four groups ordered from lowest to highest pay.

Gender pay gap reporting is not equal pay reporting. The gender pay gap shows the difference in the average pay between all men and women in a workforce. It does not show the pay differences between men and women who carry out the same jobs, similar jobs or work of equal value, which is unlawful.

ACAS have published a detailed guide for employers : http://www.acas.org.uk/ media/pdf/l/6/Gender_Pay_Reporting_ GUIDE.pdf