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The way apprenticeships are funded in the UK is changing from April with the introduction of a new apprenticeship levy.
From 6 April 2017, employers across all sectors who have an annual pay bill of at least £3 million will be required to pay a levy of 0.5% of their pay bill. For eligible employers, the levy will be collected directly by HMRC.
The purpose of the levy is to provide funding for apprenticeships. Companies will have an opportunity to reclaim the Levy through a new online digital service account to pay for the costs of an apprentice’s training, assessment and certification. Funding caps will be set to limit the amount spent on individual apprentices and this only applies to companies in England. Those in Scotland, Wales and Northern Ireland will have their own arrangements for supporting access to apprenticeships.
There is a common perception that the levy is merely a tax on employers which is being used to support a government scheme and there are some concerns that employers may fail to increase wages either in order to cushion the effect of the levy or to avoid it altogether. However, if used properly, the system may well help to increase an employers’ workforce skills and maintain a low unemployment rate across all sectors.
For those employers who do have an annual pay bill of at least £3 million, now is the time to start thinking about your obligations and consider whether any of the recruitment opportunities created by the new levy will be of interest.
For further information contact Annie Gray on 0113 220 6270.