What is the Apprenticeship Levy?

As a rule of thumb, you should always scan your payslip upon receiving it to check for any errors or discrepancies. This is especially important if you are a contractor working with an umbrella as you could be at risk of tax avoidance.

However, it can be easy to go into information overload when scanning your payslip, especially if you don’t know what to look for. 

Here at Mint Umbrella, we pride ourselves on being transparent and never leave our contractors in the dark when it comes to pay. 

In this blog, we zoom in on the ‘Apprenticeship Levy’ section of your payslip and explain exactly what it is and why you contribute towards it. 

Overview of the Apprenticeship Levy

The Apprenticeship Levy, which was introduced in April 2017, is an employment tax which pays for apprenticeship training and upskilling of current employees. Companies that make over £3m per annum are obliged to pay 0.5% of earnings to the Apprenticeship Levy to HMRC. 

What does this mean for me, as an umbrella company contractor? 

When working with an umbrella company, you technically become their employee. That means we deduct the relevant taxes from your final payslip including the Apprenticeship Levy (0.5%) which we pay directly to HMRC. This will be stated in the contract between the umbrella provider and your end client and should appear in the ‘statutory costs of employment’ section of your pay calculation. 

How does the Apprenticeship Levy benefit businesses?

Businesses that contribute towards the levy gain access to the Digital Apprenticeship Service (DAS). This is an online portal which can be used for recruitment and training purposes, funded by the Apprenticeship Levy. 

We hope this brief guide to the Apprenticeship Levy was helpful – if you wish to understand it in more detail visit the gov website here. 

Looking for a Professional Passport approved umbrella? Give us a call on 0203 967 6846 and we’ll talk you through how we work. 

For further insight into the benefits of working with an umbrella, click here.