Apprenticeship Levy

It’s getting on for two years since the Government introduced the Apprenticeship Levy – and it’s still not clear if most employers understand the system.

In simple terms, the levy is a tax on the nation’s biggest employers aimed at raising some £3billion to fund 3 million apprenticeships by 2020.

But it’s a tax directly aimed at encouraging businesses to support the training of their own apprentices to help develop the skills the country will need for the future.

The good news (if you’re a small employer) is that it only applies to companies with an annual pay bill of more than £3million. It’s set at 0.5 per cent but employers get £15,000 back from the Government in monthly payments of £1,250 to offset against it.

Here’s an example of how it works in practice.

Acme Engineering employs 250 people each taking home £20,000. That makes its wage bill £5 million a year and the 0.5 per cent levy £25,000. It gets £15,000 from the Government to offset against this, meaning Acme’s levy is essentially £10,000.

But if Acme wants to train its own apprentices it will then be able to claim back its levy contribution in the form of digital vouchers from the Government – plus an extra ten per cent for good measure.

That means it gets £11,000 in vouchers to spend training up its own apprentices – though it has to spend the cash within two years of paying the levy.

The Government reckons around two per cent of UK companies will pay the levy, so what happens if your company’s wage bill means you are among the 98 per cent?

Essentially, if you want to take on apprentices you just have to agree a plan with a training provider, meet ten per cent of the cost and the Government will pay the rest.

And if your business has fewer than 50 employees you’ll also receive a £1,000 incentive towards apprenticeships for 16-18 year olds.

Of course, there’s plenty of devil in the detail and you might want to get some expert HR advice before taking the plunge into apprenticeships.

We have all the information you’ll need at our fingertips, so just click the button for a free consultation.

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