The Apprenticeship Levy… A Closer Look

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An important new piece of government regulation is just around the corner so we thought we would take a closer look…
Some key points to consider;
• The Apprenticeship Levy comes in to effect from 6th April 2017
• It forms part of the government’s plan to address the UK’s skill shortage (UK productivity is 20% behind the G7 average)
• The scheme aims to create 3 million apprenticeships by 2020
• It is designed to support quality training by committing employers to its success
• The Levy will be funded by employers with a payroll (“pay bill”) of over £3 million per annum
• Employers will need to contribute 0.5% of their pay bill to the Levy
• Employers can then access their funds via a “digital account” to purchase apprenticeship training
• This must be approved training via a registered training provider
• Employer digital account contributions will be boosted by a 10% top up from the government
• Employers beneath the £3 million annual threshold will still be able to access training if they make a 10% co-payment
• The funding cannot be spent on the wages of the apprentice.

In effect the Apprenticeship Levy gives employers a problem and an opportunity. Clearly it is a tax on payroll which is challenging in a global, competitive business environment. On the other hand it serves as a reminder of the potential value of apprenticeships which have been used well in a number of countries. Of course we all appreciate the long term benefits of well trained staff.

We have produced a full Apprenticeship Guide here which also explains the effect of the Levy on Agency Workers.