The size of your PAYE bill has a direct impact on your Apprenticeship Levy contributions. For businesses with an annual PAYE bill of more than £3m, the Levy is charged at a rate of 0.5%. The Government will subsidise this cost with an allowance of £15,000. The higher your PAYE bill, the more you are required to pay into the Levy pot.
How your PAYE bill is calculated
As an employer, your annual PAYE bill is calculated based on the total amount of earnings you pay Class 1 secondary NICs on; including basic salaries, bonuses, commissions and pension contributions.
Your annual Paye bill:
- Total salaries paid out to employees
- Total bonuses paid out to employees
- Total commissions paid out to employees
- Total pension contributions for all employees
What about training for smaller businesses?
For smaller businesses, employers with an annual Paye bill below £3m will be required to contribute 10% of the cost of each apprenticeship. The Government will fund the remaining 90% of apprenticeship costs, in what is known as a co-investment.