From April 2017 the national apprenticeship programme will be expanded with the introduction of the apprenticeship levy. The aim of the levy is to fund 3 million new apprenticeships by 2020, encouraging businesses to employ apprentices or retrain their existing staff.
The apprenticeship levy will be charged at 0.5% of the organisations payroll payable through the PAYE along with income tax and national insurance contributions.
Organisations will be exempt from the first £15k of the levy, which translates to the levy only being charged for payrolls in excess of £3 million per year, irrespective of if the organization employs apprentices. Therefore, the levy will apply to 2% of UK employers.
Public sector organisations will also be required contribute to the levy if their payroll meets the aforementioned criteria, and 2.32% of their staff must be apprentices.
Employers who are required to contribute to the levy will be allocated digital vouchers, these can be used to fund the training of their apprentices. The voucher system will only apply in England, and employers will have between 18 and 24 months to use the vouchers. For employers who wish to invest more in apprentices, the government is considering a further 'top-up' support system. The idea is that employers who commit to employing apprentices will be able to draw more from the levy than they contribute, through the 'top-up' payment system. The main aim of the levy is for investment to increase from UK employers for training apprentices and therefore the government is committed to supporting the long-term growth for UK employers.
Apprenticeship funding currently takes into account a variety of elements based on the apprentice. As of April 2017, this will be changed and all funding will be based on the apprenticeship framework and will not change, regardless of the apprentice’s age, geographical location or prior qualifications, meaning you have a greater opportunity to hire individuals who meet your business needs. To discuss the banding of all apprenticeships, contact our Levy Management team.
Employer Levy Questionnaire
Please take our employer levy questionnaire to see how the new apprenticeship funding changes may affect your business.