Boost for employers to come

Changes that should help small- to medium-sized employers were announced in the autumn 2018 Budget and will take effect over the next two tax years.

Changes to how the apprenticeship levy works will come in from April 2019. The levy is paid by employers with an annual pay bill (excluding benefits in kind) of over £3 million – the levy is, in effect, 0.5% of the amount of that bill that exceeds £3 million. The payment is held in a levy fund and employers can spend it on various training and assessment costs, primarily for apprentices in their own business.

Many employers fail to spend the full amount of their funds in time, despite losing the funds not spent after 24 months. From April, employers can transfer up to 25% of their fund to pay for apprenticeship training in their supply chains.

Employers who don’t pay the apprenticeship levy can draw on government funds for 90% of the costs of training and assessing their apprentices. Only certain training costs qualify. Employers pay the training provider and then reclaim 90% of the cost. The 2018 Budget also announced a halving of the employer contribution to 5%, but the start date remains unclear.

Employment allowance
The £3,000 national insurance contributions (NICs) employment allowance will be restricted from 2020/21 to employers with a liability to employer’s NICs of less than £100,000 in the previous tax year.

The allowance is not available to companies where the director is the only employee above the employer’s NIC threshold – £166pw in 2019/20. It is also not generally available to personal service companies or to people who employ domestic workers, such as a nanny.

If you’d like to discuss options for your business, please get in touch.