This year’s National Apprenticeship Week is upon us. Coordinated by the Skills Funding Agency, the week will include hundreds of events and activities across England to showcase apprentices and apprentice employers. The Government is committed to 3 million apprenticeship starts over this Parliament, and introducing the Apprenticeship Levy is key to that ambition.
Tell me more…
The apprenticeship levy is scheduled to come into effect in April 2017.
Back in August, the Government started consulting on plans to introduce a levy on larger businesses, specifically to fund the commitment to new apprenticeships.
In November, the Government published a response to the consultation and gave more details about the levy.
Last month, draft legislation to introduce the levy was published.
Will my business need to pay the levy?
In effect the levy will only be payable by employers with a paybill that exceeds £3million per year, at a rate of 0.5%. This is because all employers will have an annual allowance of £15,000 to offset against the levy.
The Government estimates that fewer than 2% of employers will pay any levy, so this will only affect the largest employers in the South West.
Is there any small print to be aware of?
The levy will be payable by employers across all sectors, both public and private.
Connected employers, such as a group of companies (or charities), will only receive one £15,000 annual allowance.
For purposes of the levy, the ‘paybill’ will be calculated based on total employee earnings, but not including benefits in kind.
How will it work in practice?
The levy will be collected from larger employers by HMRC, via the PAYE system.
In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeships Service. All employers in England will be able to access funding through that service.
So this is good news for SMEs in the South West?
Yes – it should be. Most employers in our region will not be required to pay the levy, but should be in position to reap the benefit of the funding for apprenticeships.
For our larger employers who will be required to pay the levy, the Government have stated that you will be able to access more funding than you put in, through a system of Government ‘top-ups’.
Of course, the ‘proof of the pudding’ will be whether the investment in apprenticeships delivers the long term productivity gains that employers and Government hope to achieve.
The construction and engineering construction industries already have a similar system – how will that work in future?
Companies in these sectors already pay training levies. Government is working with employers and sector representative training boards to evaluate the options before the introduction of the apprenticeship levy.
We haven’t taken on an apprentice before – any tips for where can we get help?
An apprenticeship is usually a tri-partite arrangement between you, the apprentice, and a training provider. Your local colleges are a good place to start investigating training provider options.
From an employment law perspective, apprenticeships are a little different, but there is nothing to fear if you set up contracts correctly at the outset. Stephens Scown are experienced in helping employers to set up employment contracts of all types, including apprentices, and would be happy to help you.
Mark Roby is a HR advisor and paralegal based in our Truro office. If you would like to contact Mark about any of the content in this article, then please call 01872 265100 or email employment@stephens-scown.co.uk.