The apprenticeship levy is coming: so what?

The apprenticeship system in England is changing. The Chancellor has mandated that apprenticeships will be funded through an apprenticeship levy from April 2017. This is a payroll tax on all employers to fund new apprenticeships. And, although government information is currently still fairly vague there are some important points to note.

  • The levy will go live from 6th April 2017 for all new starts
  • The levy is set at 0.5% of a company’s pay bill, which will be paid monthly through PAYE
  • Only employers with a paybill of over £3 million per tax year will be eligible to pay into the levy (because the levy is a monthly deduction, costs will be taken in any month where an employers paybill is over £250,000)
  • For non-levy paying businesses, they will have to pay for their apprenticeship programme through a co-investment cash contribution
  • The new single funding model will apply to frameworks and standards, which will be categorised into new funding caps to determine the maximum levy/co-funding available for individual apprenticeships
  • Employers who pay the levy and participate in apprenticeship programmes will get more out of the levy than they put in with a 10% monthly top up to their digital account
  • Levy funds can be used to deliver apprenticeships across your organisation, not just for new recruits
  • Levy payments, including top-ups, expire 18 months after they have been deposited in a Company’s digital account

However, it’s important to note that this new funding system is likely to see further adjustments in the run up to launch. Lifetime Training will do its best to stay on top of all things levy and will issue updates regularly to ensure clients and the wider business community have access to clear and concise information.

“The government is committed to boosting productivity by investing in human capital. As part of this, the government is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The levy will help to deliver new apprenticeships and it will support quality training by putting employers at the center of the system. Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.” – HMRC, February 2016

Enjoy cash-free apprenticeship programmes until 5th April 2017. There is zero tax to pay for any apprentices who are enrolled before this date so it makes sense to review your existing training and development requirements now and sign up your new and existing staff onto role and developmental relevant programmes.

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