The Apprenticeship Levy and umbrella contractors
Introduced in April 2017, the Apprenticeship Levy came into force to generate funding for apprenticeships as well as improve the quality of apprenticeship and training schemes available.
More information on the levy is available on the government’s website.
The levy and Exchequer’s umbrella employees
The cost of the levy to Exchequer is significant, and in order to offset the cost of this and ensure we maintain capacity to provide an excellent service, we charge a small margin of 0.5% of PAYE per week, this is in addition to our overall umbrella margins.
What will happen to the funds collected under the levy?
The money collected by the government from the levy is allocated to an apprenticeship training fund. There are constraints on how this money can be spent.
Exchequer Solutions does not benefit financially from the additional 0.5% margin and does not spend this money on anything other than training for apprentices. Any funds which aren’t spent will be retained by the government. At Exchequer Solutions we are committed to trying to ensure that our contractor workforce benefits from the levy wherever possible.
Who is affected?
Anyone who is paid PAYE, so all contractors registered on our umbrella scheme.
Self-employed workers are not affected by the change so if you currently operate your own PSC/ Limited Company or are registered on our CIS scheme you will not be impacted.
Is it time to consider your options?
If this legislation has an impact on you then it might be a good time to review your current situation and the way you receive your pay. For many contractors our umbrella scheme will still be the best approach and umbrella employees can continue to benefit from employment status and all the benefits that go with it.
If you work in the construction sector you may want to consider the CIS option.
If you would like to discuss your options then please get in touch. We will be happy to discuss your individual circumstances and help you to decide which route offers the most tax efficient solution.