Award winning service! Sign Up What is the Apprenticeship Levy and why does it appear in my pay calculation? (2 minutes to read) HomeWhat is the Apprenticeship Levy and why does it appear in my pay calculation?What is the Apprenticeship Levy and why does it appear in my pay calculation? The Apprenticeship Levy was introduced by the government in April 2017 and is designed to fund apprenticeship schemes – which allow employers to recoup some costs of providing training to apprentices – across the UK. 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. 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. You may also like to read 2017 changes to the Apprenticeship Levy If, by that criteria, they deem it to be employment then the organisation will be required to deduct Employee’s National ... Read More Your Payslip Explained Payment will be made by Same Day Fast Pay Transfer, providing cleared funds are received into our bank account by ... Read More IR35 and the private sector The Intermediaries Legislation, more commonly known as IR35, was introduced over 20 years ago and requires contractors working in ‘disguised ... Read More Most Popular Guides How is my pay calculated? What is Employers National Insurance? What is IR35? How does an Umbrella company work? Umbrella vs. Limited Ask us a question Resource Categories Starting up Umbrella Company Advice Contractor Tax Industries Calculate Your Take Home Pay Comprehensive Contractors Guides Sign up to Contractor Umbrella The complete umbrella package... With the flexibility to work either limited or umbrella. SIGN UP TODAY Want to learn more about contracting? We understand you might have lots of questions, so why not give one of our friendly experts a call on 01206 591 000. Alternatively, sign up using this form and we will send you an email, guiding you through the steps you will need to take. SUBSCRIBE ME COOKIES GDPR POLICY GENDER PAY GAP COMPLAINTS CONTACT US ANTI-MODERN SLAVERY The website and its content is copyright of Contractor Umbrella 2018. All Rights Reserved. Contractor Umbrella Ltd is a company registered in England and Wales with Company Number 4324081. VAT Number 780351338. Our registered address is Unit 36 Silk Mill Industrial Estate, Brook Street, Tring, HP23 5EF.