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01 November 2016 · by Laura Smith Apprenticeship Levy Update

In recent years the Government has shown their support for apprenticeships across all industries and the growth in the number of apprenticeship training schemes available has increased along with this and businesses are taking note. With rising costs of higher education and the younger generation being increasingly ambitious, the prospect of learning whilst in a paid job is becoming more attractive for school leavers as an alternative to University.

As of 6 April 2017, the Government will be introducing the Apprenticeship Levy. Any organisation within the UK with a pay bill of £3 million or more will be required to pay the levy, which will be 0.5% of your annual pay bill and will be paid monthly via PAYE.

For example if your annual pay bill is £7,000,000
Apprenticeship levy of 0.5% x £7,000,000 = £35,000
Minus £15,000 allowance = £20,000 annual levy payment

The levy will be managed through an online digital apprenticeship service account where you can see exactly how much is available to spend on apprentice training and assignments from an approved provider each month. The Government will top up the amount available in your account by 10% as a contribution to training. The funds have an 18 month shelf life so make sure that you keep on top of it and start using the funds before they expire, you can use the online account to search for training providers and arrange assessments when required.

Now is a better time than ever to look at investing in apprenticeships within your business, take advantage of the grants with up to £4000 available, dependent on region and level of apprenticeship, and grow your business with ambitious school leavers.

There are a few rules when taking on apprentices…

  • The apprentice must be employed in a real job and can be an existing employee or 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% of their time on off-the-job training

If your business will be paying the levy this will be put towards the delivery of an apprenticeship scheme, each apprenticeship will have its own level of funding band and employers can also negotiate the cost of this with the training provider, meaning no costs are set in stone, which is a real positive for employers.

For more information on the latest employment law updates, why not request our Employment Law Guide here. 

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