The Apprenticeship Levy

Apprenticeship Levy

What is the Apprenticeship Levy?


The Apprenticeship Levy was first announced at Summer Budget 2015, and at Autumn Statement 2015 it was announced it would come into affect in April 2017. It is a levy on UK employers to fund new apprenticeships, but will only be paid by UK companies that have an annual pay bill of more than £3 million.

The levy will be charged on their pay bill at a rate of 0.5%, it will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance.

Each employer will receive an allowance of £15,000 to offset against their levy payment, so in effect it will only be paid on a proportion of the pay bill (the amount that exceeds £3 million.) Companies that have more than one payroll will only be able to claim the allowance once.

Who will this new levy affect?
The companies that are affected must pay a levy, it will affect employers in all sectors, but less than 2% of companies will need to pay the levy. If your company is affected by these new requirements, then you need to ensure you are ready for this change in April 2017.

Companies will need to notify HM Revenue & Customs (HMRC) each month whether they are eligible to pay the levy. You will need to calculate the size of the levy you need to pay, and declare this to HMRC, you also need to include the levy in your usual PAYE payment. This declaration will be made via your Employer Payment Summary (EPS).

Once companies based in England have paid the levy, they will be able to access funds for provision of apprenticeships via a digital apprenticeship service account. By 2020, it is anticipated that all companies will be able to access this account, including those not subject to the levy.


How to Calculate Your Levy Charge

Although eligibility to pay the levy is based on the size of your annual pay bill, the levy will be paid on a monthly basis. This means you need to carry out the following calculations, you can also use HMRC’s basic tools to help you figure out the calculation:

For the first tax month of the year 

• Divide your Apprenticeship Levy allowance by 12 
• Subtract this figure from 0.5% of your monthly pay bill 

For subsequent months: 

• Calculate your total pay bill for the year to date 
• Calculate the total of your monthly levy allowances for the year to date 
• Subtract the total of these levy allowances from 0.5% of your total pay bill for the year to date 
• Subtract the amount of levy payments you have made for the year to date. 

Payroll Reporting Requirements

If your levy payment changes from month to month, this must be declared on the next EPS following the change.

If you make a mistake regarding payment of the levy, you will need to declare this on an additional EPS at the end of the tax year, and make your payment shortfall.

Records of all information you use to calculate your levy payment must be retained for at least three years following the end of the tax year to which they relate.


The introduction of the Apprenticeship Levy is just the latest in a series of changes that have made administering payroll more complex. If you currently administer your payroll in-house, then now might be the time to consider outsourcing it to an external payroll provider that specialises in this area. You can see the benefits about outsourcing payroll in this short article by following this link.

If you want any more help regarding the information discussed then please get in touch, you can find all our contact details at www.chrysalispayroll.co.uk.

The Spring Budget 2017

National Minimum and Living Wage Increase - April 2017

National Minimum wage and Living Wage is set to rise in April 2017

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.  This rates are set to rise in April 2017.  To qualify for these rates the below applies; 

You must be at least:

• school leaving age to get the National Minimum Wage
• aged 25 to get the National Living Wage - the minimum wage will still apply for workers aged 24 and under

New rates

Below are the new rates are for the National Living Wage and the National Minimum Wage. 

The benefits of using Chrysalis Payroll for Automatic Enrolment

The benefits of using Chrysalis Payroll for Automatic Enrolment

Introduction to Auto Enrolment

The workplace pension is the law and it states that every employer in the UK has duties they have to follow. Over the coming year, it is said that 750,000 small and micro employers are due to reach their staging date, with everyone having to comply by 2018.

Bearing this in mind I was astonished at a statistic I read the other day from an Auto Enrolment (AE) survey saying 1 in 10 SMEs plan to ignore these legislation changes, whilst a further 11% are still unaware what Auto-Enrolment is. 

Many employers will ask the question, 'Does Auto Enrolment affect me?'. If you are an employer in the UK and employ one or more employees, then the answer is yes and you should start preparing your business now. Auto Enrolment is a key part to the pensions reform, and as an employer you now have legal duties to enrol certain members of your workforce into a pension scheme which follows a certain set of criteria.

The date you are legally obligated to do this is known as your Staging Date which can by found on The Pensions Regulator Website.

Employers must enrol all eligible jobholders into an AE workplace pensions scheme. The employer must also contribute into the employee’s pension scheme, with contribution rates rising over the coming years.

To comply with Automatic Enrolment, employers need to complete a number of AE duties, including an assessment of all employees, communications, which involves sending the right letter, to the right employee, at the right time, opt-in’s and opt-outs,, calculating contributions and then sending all the relevant information over to their chosen pension provider.

IMPACT ON EMPLOYERS

Along with the new legal duties under the new legislation surrounding Auto Enrolment, you'll also have to think about the impact it will have on your business finances, we have listed some of these costs below;

• More admin work means longer hours for payroll staff
• Contribution costs to employees pension scheme
• Making your software compatible (normally a bolt on purchase)
• Charge from the pension provider for using a scheme

Chrysalis Payroll & Auto Enrolment

Employers can benefit greatly from using our honest and reliable AE solutions.  The first main difference you will realise about how we deal with Auto Enrolment as to any other bureau, is that we don’t charge for this service.  Our aim is to make things simple for you, and we want to help reduce the extra costs Auto Enrolment has placed. 

If you already have payroll ran by ourselves, we believe this shouldn’t be at an extra cost. Auto Enrolment is already going to cost you extra as an employer, so we don’t want to make it worse.

AE functionality should be included free of charge as part of your payroll package, many professionals have saw the introduction of Auto Enrolment as a chance to increase revenue due to the increased workload that takes place. 

Here at Chrysalis we pride ourselves at being experts in this field, our software is fully automated and ready for Auto Enrolment, our knowledge surrounding this new legislation allows us to be efficient and accurate in processing, allowing the freedom to offer you this service completely free of charge.

We offer a bespoke package that allows you to choose which parts of AE we take care of, from just the processing to start to end procedures, it is completely up to you.  As an employer, using Chrysalis Payroll to help you with your Auto Enrolment duties would give you a hassle free, simple alternative to Auto Enrolment. For efficient and successful AE compliance, Chrysalis Payroll offers huge advantages for employers.

How we can help with Auto Enrolment

Chrysalis Payroll offers a full flexible solution to Auto Enrolment. What’s more, there is NO additional charge for Auto Enrolment.  The services we offer are listed below; 

Auto Enrolment Services

Ongoing Service

If you are looking for a stress-free alternative to Auto-Enrolment our ongoing solutions 

are perfect.  From £1.50 per employee or free with our 12 month payroll contract we can 

take care of all of your ongoing Auto Enrolment duties including the following;

> Calculating pension deductions accurately.

> Creating and sending employee correspondence.

> Liaising with your pension provider.

> Upload of files to pension provider.

> Completion of your declaration of compliance. 

> Dedicated Auto Enrolment specialist.

> Centralised Auto Enrolment email and support line for employees.

The AE process with Chrysalis Payroll

Chrysalis can automate a lot of the administrative Auto Enrolment processes for you. Simply give us your staging date and which pension provider you wish to use, and the rest is easy.

Find out just how easy the entire process can be by speaking to one of your specialists today.