The Apprenticeship Levy

The Apprenticeship Levy

The government is planning to promote schemes to train three million new apprentices by 2020 - and to increase the  focus on employee training outside the work place.

To achieve this it plans to introduce a tax on big businesses. The Apprenticeship Levy

The Department for Education (DfE) has announced how the tax. Set to come into force in April 2017, the levy will require employers to invest in apprenticeships, with the size of the investment dependent on the size of the business.

Employers with an annual pay bill of more than £3 million will be required to spend 0.5 per cent of the total on the levy.

The Government is also introducing a 'levy allowance' of £15,000 per year, which will be subtracted from the 0.5 per cent total.

While the levy is being introduced in April, payments are set to start in May 2017 and it will be up to employers to notify HMRC each month as to whether they are eligible to pay.

Once employers in England have registered and paid the levy, they will then be able to access funding through a digital apprenticeship service account

This will allow them to select and pay Government-approved training providers and post apprenticeship vacancies.

Initially, the service will only be available to businesses paying the levy, but the plan is to give all employers access to the digital account by 2020.

In addition to the amount paid into the account, the Government will apply a 10 per cent top up on funds, meaning that for every £1 paid in, the employer gets £1.10 to spend.

Businesses will have 24 months to spend their funds ('vouchers') before they expire.

It's worth noting here that the digital apprenticeship service will only apply to businesses in England. Separate measures will be in place for Scotland, Wales and Northern Ireland.

What does 'Government-approved' provider mean?

 To make sure standards are consistent and rigorous, the Government has opened a new register of apprenticeship training providers. These providers must pass quality and financial tests, while those with an inadequate Ofsted rating will not feature on the register.

Anything else?

One of the main concerns highlighted when initial plans were announced in August, was to do with support for disadvantaged students. In light of this, more measures in support of this group were announced in October, including:

More than £60 million to be invested in training for apprentices from the poorest areas in the country;

Additional funding to employers who take on 16- to 18-year-olds and 19- to 24-year-olds who were in care or who have special educational needs;

And an extra 20 per cent of funding to providers to train 16- to 18-year-olds.

The scheme has generally had a lot of enthusiasm and we look forward to bringing more news on this in future.