Use it or Lose it! Why Care Home's Can't Afford to Let their Levy Pots Expire

It’s time to decide who benefits from your Apprenticeship Levy tax

As an employer, you may be paying some tax to the government without even knowing it. Since April 2017, all UK employers with an annual wage bill of more than £3 million have been paying 0.5% of wages over this amount to the HMRC. But it’s no ordinary tax. You can get this money back. Not only this, but the government will give you 10% on top.

In this article, you’ll learn how much you have been paying in this extra tax, and when you will no longer be able to reclaim the money. Crucially, you’ll also learn where this money will be used if you don’t use it.

How much extra tax have you paid?

It’s a straightforward process to calculate how much your organisation may have paid to the HMRC. For every £1 in wages paid over £3 million, your payroll will have paid 0.5p to HMRC. Doesn’t sound much, does it? However, for every £1 million, this tax is £5,000. Across the whole country it is estimated that:

  • This tax raises £2.675 billion per year*
  • The human health and social work sector pays £360 million in this tax each year*

What happens with this tax?

HMRC pays all this money generated into the Apprenticeship Levy, and here’s where it becomes interesting to you. By accessing this levy, you can use the extra tax your organisation has paid to fund training of your employees. And for every pound you spend on that training, the government will add 10p.

Here’s how it works:

Step 1: HMRC collects your levy payment through the PAYE system.

Step 2: HMRC pays the funds into your Digital Apprenticeship Service (DAS) account. The government tops up your account with an extra 10%.

Step 3: An employee joins the apprenticeship scheme.

Step 4: Apprentices receive training.

Step 5: Payment for the training is deducted from your Apprenticeship Levy.

Step 6: Use it or lose it.

What do you mean “Use it or lose it”?

You’re paying this extra tax. You can’t get out of it. But the government won’t let it hang around forever. There’s a time limit on when you can claim it back to use for training. That time limit is two years from the date of payment. Once the two years have passed, the government will take this money and use it elsewhere – most likely for training of staff in other companies.

Time is running out for all employers who have been paying into the levy pot by way of an extra tax. If you don’t start planning to use your levy pot now, you will lose it. Most likely, the government will use it to fund the apprenticeship training of one of your competitors. And it will be they who gain from the five big benefits of training health and social care staff  – and you probably don’t want that to happen.

Use the levy pot for your benefit

Whether you have been paying into the levy pot or not, you can use funding from it to pay for the training of your care home’s staff. To find out more and learn how to access this valuable funding to which your organisation may already have paid thousands, contact StriveCare today.

(*source HMRC modelling)

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