The Levy is a small tax charge, payable by all companies with an annual wage bill in excess of £3m. Specifically, the tax is 0.5% of the company’s gross payroll. It’s paid to HMRC alongside income tax and National Insurance. If separate companies form a group, their total payroll is used for the calculation – this prevents companies splitting into multiple smaller companies, with wage bills below the £3m threshold, in order to avoid the charge.
Contractor Umbrella are proud to be a Levy Network Donator, supporting the FCSA apprenticeship levy by donating to their fund to provide training on apprenticeships and other much needed programmes. You can find out how this fund could help your organisation by reading more here.
If you’ve read our article on how an umbrella company employee’s pay is calculated, you’ll know that the umbrella company pays the statutory costs of employment – such as Employer’s National Insurance and pension – from the funds received from your agency or end client. The Apprenticeship Levy is another one of these statutory costs, and so will appear on your pay calculation alongside these other statutory costs.
Before the Levy was introduced, and for a period following its implementation, there was an extended dialogue between recruiters, umbrella companies and HMRC regarding an exemption to the Levy for these parties who engage contractors under an overarching contract of employment. However, this dialogue was unproductive – so the Apprenticeship Levy remains a component of the statutory costs of employment on your pay calculation and is paid directly to HMRC.