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Apprenticeship Levy: Be prepared

26/8/2016

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With approximately eight months to go until businesses see a percentage of their payroll deducted to help fund apprenticeships across the UK, the government has released further guidelines on how the new Apprenticeship Levy will work in practice.

Although some employers had anticipated a delay to the levy in light of the result of the Brexit vote in June, it has been confirmed that the new scheme will take effect from April 6, 2017.

The initial announcement last December revealed businesses whose annual wage bills exceed £3m per year will be charged at a rate of 0.5 per cent of their total payroll, with an allowance of £15,000 per year to offset costs. For example, if your wage bill is £5m, you’ll need to pay £10,000 into the levy pot.

The latest announcement says:

  • The levy will be paid to HMRC through the PAYE system and businesses will be able to access funding through their own digital apprenticeship account.
  • The account will contain the funds which will be used to pay training providers to deliver apprenticeships, and is set to go live in January 2017 to allow employers time to familiarise themselves with the new system.
  • Non-levy payers will be affected by the changes too, with the government proposing that small businesses should receive financial help to pay for training, enabling them to apply for 90 per cent of costs and pay the remaining 10 per cent themselves.
  • In addition, businesses with fewer than 50 employees will be encouraged to take on young apprentices, following the proposal that there should be no cost to train those aged between 16 and 18.

The government is currently seeking views on its latest proposals, with confirmation and further details expected in October and December.

There’s no doubt the levy will encourage employers to make the most of apprenticeships and help to improve skills. However, businesses must be prepared ahead of April and not be tempted to make decisions for the sake of spending the levy, but be equipped with a strategy.

For advice on how to prepare for the Apprenticeship Levy, contact Jigsaw Training on 01772 430004 or info@jigsaw-training.co.uk.

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