Understanding the apprenticeship levy
On the 6th April the new apprenticeship levy will be introduced by the government to help fund their initiative to deliver an additional 3 million apprentices by 2020. It only applies to England at this stage with Scotland, Wales and Ireland having different legislation.
There is no doubt that the biggest impact will be on large companies with a wages bill of over £3m.
These organisations will be required to pay the apprenticeship levy charged at a rate of 0.5% of their annual bill which will be deducted at source and paid into the government fund.
If you are a smaller business you will not have to pay the levy but you can still use it to your advantage, in fact it actually represents an opportunity to SME’s.
So what are the key points that will benefit you?
- No requirement to pay into the levy if your wage bill is under £3m.
- Current apprenticeships are unaffected and will continue as normal.
- Staff training can be covered through the levy scheme even if you are not paying into the levy due to the size of your business. The government funding 90% of the cost of this training leaving you to pay the remaining 10%.
- Businesses with under 50 employees won’t pay anything if they employ under 19’s and will receive £1000 with an additional £1000 to the training provider for their training.
- Training providers must be accredited by the Government and have satisfied the criteria of the Skills Funding Agency so you can be assured of a good and standardised level of training.
- The system will be managed online for ease in the future.
- You can select an apprenticeship framework to work to.
- All apprentices will need to be signed off and complete a final examination to pass their apprenticeship and this will be from an independent assessor.
There is a still some confusion and fear over the levy but you shouldn’t be put off employing more young people into your business.
Apprentices are a vital part of the workforce with a quarter of small businesses already employing them and 24% considering doing so.
Young people have the opportunity to grow and be part of the business and can be moulded into the right staff with the correct mentoring and training.
They are also a cost effective way to bring new staff into your business without having prohibitive costs.
You can view the current Government apprenticeship levy guidelines on this link, they have said further announcements are likely to follow after implementation as the new guidelines are bedded in.