The scheme enforced across the country on 6th April 2017 and is a business levy on all UK employers, to fund new apprenticeship training opportunities.
The levy is charged at a rate of 0.5% of an employer’s pay bill and all employers receive a £15,000 annual allowance, to be offset against the bill. The levy is payable through Pay As You Earn (PAYE) alongside income tax and National Insurance.
Control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. Businesses paying the apprenticeship levy will be able to access the funds they have paid to cover the cost of apprentice training through a new digital account.
The scheme comes into play after the government made a commitment to increase the number of quality apprenticeships available, as the number of businesses investing in apprentices has fallen consistently in the last 20 years. Employers can use the levy fund to approach an apprenticeship training provider for apprenticeship training, using money available in their digital account. However, it cannot be spent on anything else, such as internal training or apprentice salaries. Apprenticeship training must be supplied from a government approved list of training providers.
The apprenticeship levy will address the chronic skills shortage in industries such as the engineering and construction sector, to ensure there are enough people coming through the industry with the skills required to meet the industries growing needs.
Did you know that an organisation can become their own training provider? Although it will require OFSTED inspections and the administration that goes along with being a provider, this is an option many organisations across the UK have taken. If your apprenticeship training costs exceed the levy payments made, the Government will allow employers to draw down more funds from any unclaimed levy that other employers have paid.
For non-levy organisations with 50 employees or less, there is also a £1000 incentive towards apprenticeships for taking on someone aged 16 to 18.
Interested? For more information on how the apprenticeship levy could affect you and your business visit gov website.