The apprenticeship levy comes into force in April 2017 and larger employers need to be aware of the change and how it will impact on them. Organisations in England with an annual pay bill of more than £3million will need to register and pay a levy of 0.5% of their payroll.
The levy has been introduced to generate £3billion a year and will be used to fund three million apprenticeships. The levy will effectively double spending on apprenticeships in England. It isn’t being applied in Scotland, Wales or Northern Ireland where different measures will be in place.
From May onwards employers who are registered will be able to access vouchers via a digital account to fund apprenticeships. To support apprenticeships and encourage employers the government is applying a 10% top up, so for every pound paid in an employer will get £1.10 back to spend on training their apprentices. Businesses can only use this funding for apprenticeships so any businesses which have to pay the levy but do not use apprentices will miss out.
Businesses will have 24 months to use their vouchers before they expire.
Initially the scheme will only be open to businesses paying the levy but the government plans to roll the scheme out so that all employers will have access to a digital apprenticeship account by 2020.
Some business people have criticised the new levy as an additional “payroll tax” whilst other business owners and employers have welcomed the change.
Worryingly recent reports in the media suggest that many businesses are unaware of the imminent changes and feel they haven’t been properly informed. If your organisation currently has an annual pay bill which exceeds £3million then you can find out more on the government website here.
