What does the new Apprenticeship Levy mean for your business?

What does the new Apprenticeship Levy mean for your business?

The Apprenticeship Levy was announced by the Government in last year’s Autumn Statement to create and fund 3 million apprenticeships by 2020.

Who will be affected?

From April 2017 public and private sector employers across all industries and sectors including not-for-profit organisations and charities who pay more than £3m a year in wages and salaries will pay a 0.5% levy to fund apprenticeships.

How will it work?

The levy will be payable monthly through the PAYE system into a digital account and will be payable regardless of whether the employer currently has or intends to have any apprentices.

An employer will be able to draw down vouchers from the Apprenticeship Funding pot to recruit and train new apprentices or retrain existing staff in new skills through apprenticeship routes even if they have prior qualifications.

Employers will receive a 10% top-up from the Government to the funds they have for apprenticeship training. Employers that want to spend more on training than is in their digital account will see 90% of their additional apprenticeship training costs funded by the Government.

There will be 15 ‘proposed’ new funding bands that will range from £1,500 to £27,000. The proposed bands are still provisional and the final rates will be announced by the Government in October 2016. 

The upper limit of each funding band will cap the maximum amount of digital funds an employer can use towards an individual apprenticeship or that the Government will co-invest. All existing and new apprenticeship frameworks and standards will be placed within one of these funding bands and it will be up to employers to negotiate prices with training providers.

The Government also proposes to incentivise employers to take on 16-18 year olds, with additional support of £2,000 per trainee paid at 3 and 12 months into the apprenticeship. This incentive is split equally between the employer and the training provider.

A register of apprenticeship training providers will be introduced from April 2017.

What will I get back from the levy?

Employers in England will receive a £15,000 annual training allowance to offset the payment of the levy, which will be paid in digital vouchers to use for training apprentices with a recognised training provider. If levy funding is not used within 18 months it will expire and will be made available to other employers.    

There will also be a connected persons’ rule, similar to the employment allowance connected persons rule, so employers who operate multiple payrolls will only be able to claim one allowance.

The final details of how the Apprenticeship Levy will be implemented are expected in October. We will stay close to the dialogue and keep you informed when there are any further developments to report.

If you would like any additional information regarding the apprenticeship levy please contact our Payroll Partner, Graeme Sheridan on the details below:

Graeme Sheridan
direct dial: 01942 292506
mobile: 07712 679064
email: graeme.sheridan@jsllp.co.uk