This is coming up more and more in conversation so thought it useful to share our guidance on this as follows:
Making the assumption that you intend to enter into apprenticeships eligible to be paid via the apprenticeship service in the 24 months expiry period, the accounting treatment for the payment made would be as follows:
- The payment made under the Apprentice Levy would represent a prepayment for training services and is recognised as an asset until the service is received.
- When the service is received an appropriate expense should be recognised.
- The asset recognised should be assessed for impairment in accordance with Section 27 of FRS102.
There is then the issue of the 10% ‘top up’ provided by the Government (for every £1 that enters the employers Apprentice Levy account, an additional £0.10 is provided by the Government). This is recognised as government grant income at the same point in time as the expense for the training services and is recognised in accordance with FRS102 section 24.5D
If you do not intend to use the levy to enter into eligible apprenticeships then you would just expense the payment of the levy.