From next year, larger employers will start to pay a levy which will be allow them to pay for Apprenticeship training within their organisations.
What is an apprenticeship?
There are rules governing what an apprenticeship is. The main ones are:
the apprentice must be employed in a real job; they may be an existing employee or a new hire
- the apprentice must work towards achieving an approved apprenticeship standard or apprenticeship framework
- the apprenticeship training must last at least 12 months
- the apprentice must spend at least 20 per cent of their time on off-the-job training
About the Levy
The Levy is compulsory for all employers with a paybill over £3m per annum, and if they don’t utilise it within 18 months the amount contributed will be taken by the government as a non-refundable tax. The idea is to “encourage” larger organisations to train Apprentices.
There is a small contribution of 10 per cent added by the government (BIS) on top of the Levy, so the purchasing power of the funds are increased. The employer is then expected to organise approved Apprenticeship training by negotiating courses with government approved providers. Once authorised the funds kept by BIS will be paid over to the approved body. Funds can also then be used to pay Apprentices wages as well. Apprentices under 25 also now no longer attract employers’ national insurance contributions, which at 13.8 per cent are also a key incentive.
If you currently have, or expect to have, a paybill for your business over £3m per annum, you should start to plan to a pilot Apprenticeship scheme in order to utilise the Levy that you will be required to pay from next April.
Click here fore more information: Apprenticeship funding: how it will work
Note: The Levy is proposed to initially be 0.5 per cent of the pay bill, but with a fixed annual allowance of £15,000 deducted against this amount. This effectively means that nothing is contributed until the pay bill exceeds £3m.