The Apprenticeship Levy is the latest legislative change brought in by the government which is having an impact on our industry.
What is the Apprenticeship Levy?
The levy comes into force from April 2017 and has been brought in by the government to generate funding for apprenticeships. The government’s aim is to provide 3 million more apprenticeships by 2020 and to improve the quality of the apprenticeships and training available.
Aimed at larger organisations with a high volume of employees the Apprenticeship Levy will help large employers to fund high quality apprenticeship programmes within their workforce. More information on the Apprenticeship Levy can be found on the government website.
Exchequer Solutions and the Apprenticeship Levy
Unfortunately, the way the levy is being applied means that many umbrella companies and recruitment companies will be caught up in the change due to the size of their annual pay bills.
The introduction of the levy will have an impact on Exchequer Solutions and our umbrella contractors. The cost of the new levy to Exchequer is significant and unfortunately to cover this cost to the business we will be increasing our margin by 0.5% of PAYE for each worker.
The increase to our margin is relatively small but nonetheless we are disappointed that the new levy has been applied in this way leaving us with no choice but to pass on the cost to our umbrella contractors.
The money collected by the government from the new levy will be allocated to an apprenticeship training fund. There are tight constraints on how the money can be spent.
Exchequer Solutions will not benefit financially from the increase in margin and will not be able to spend this money on anything other than apprenticeship training. 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 registered on our umbrella scheme. If you currently have workers registered on our umbrella scheme then we will notify them individually about the changes and the small difference it will make to their take home pay.
Self-employed workers will not be affected by the change so your workers who operate a PSC/ Limited Company or are registered on our CIS scheme will not see any changes.
Get in touch
As always we are committed to ensuring compliance and supporting our recruitment agency partners in any way we can. If you have any questions about the changes then please speak to your account manager.
If you have workers who are considering their options in light of this change then we will be happy to speak to them. It may the right time for some contractors to review their position. We offer a range of schemes and will work with an individual to help them decide which route is best for them. Some contractors may find that the CIS scheme or setting up a Ltd company would offer a more tax efficient route.