The Apprenticeship Levy comes into force in April 2017.  It’s being introduced as part of the Government’s commitment to create three million apprenticeships by 2020, and is expected to raise £3bn annually across the country.

Jayne Worthington, Managing Director of Manchester based training organisation, The Skills Company has provided the answers to some common questions that employers have about the levy.

Which employers will be affected?

Any business with a pay bill of more than £3m a year will have to pay the levy.  That includes public sector, not-for-profit organisations and charities.  98% of employers are below the threshold and will pay nothing at all.

How much will I have to pay?

It will be 0.5% of your PAYE bill, with an offset training allowance of £15,000.  You can work out the amount of your levy payment by using The Skills Company’s Levy Calculator tool.

Is it just another tax I’ll have to pay?

It is another cost, but the difference with the levy is that you can draw your money back in the form of apprenticeship training.  You can recruit and train new apprentices, or you can progress and train your existing staff through apprenticeship routes.

So how do I get my money back?

-       By turning any new vacancies into apprenticeships.  At The Skills Company, we can provide a quick assessment of any current or upcoming vacancies you have and advise whether they can be offered as apprenticeships.

-       By up-skilling your current staff.  We can revise your workforce development strategy or create a new one for you to identify staff who would benefit from training, and advise whether this training could be done as an apprenticeship.

How will it work?

The levy will be payable monthly though PAYE into a digital account. You will then be able to draw down vouchers to pay for your apprenticeship training with a recognised training provider.  The Government will apply a 10% top-up to the funds you have for apprenticeship training.  That means for every £1 that enters your digital account to spend on apprenticeship training, you get £1.10.

What if I don’t want to pay it?

Unfortunately you don’t have a choice.  If you don’t use the money in your digital account within 18 months, your money will become available for other companies to spend, so it’s a case of use it or lose it.

What if I don’t need any new members of staff?

You can use your Apprenticeship levy to pay for apprenticeship training for current staff, as well as for taking on new apprentices.  We can design programmes for you in both cases and deliver the training.

Can I use the levy for other forms of training?

No, but you should bear in mind that the world of apprenticeships has changed dramatically and now covers roles like marketing, HR and management.  Get in touch with us and find out more.

How many Apprentices will my levy get me?

Apprenticeship training costs vary from £3,000 to £27,000 so the number of apprentices you will be able to fund will depend on the particular apprenticeships you would like to offer. We can provide further guidelines on training costs as part of a workforce assessment.

What if I don’t have to pay the levy, can I still get apprenticeship training?

If you don’t pay the levy, you won’t need to use the digital apprenticeship service to pay for apprenticeship training until at least 2018.  When the new funding system begins in April 2017, you can choose the training you’d like your apprentices to receive, and chose an approved training provider.  You may be asked to make a contribution to the cost of this training and government will pay the rest, up to the maximum amount of funding available for that apprenticeship. 

Do I need to do anything about it now?

You need to start planning to take advantage of this opportunity so you have an established apprenticeship scheme to ensure that you get all of your money back and pay almost nothing for the training of new and/or current employees.  

Jayne Worthington concluded:   “We are already working with many companies preparing for this transition and to make it as easy as possible.  The benefits of recruiting apprentices are well documented, with 89% of employers reporting that apprenticeships helped their business improve the quality of their product or service, and four in five employers saying that apprenticeships help to reduce staff turnover.

“We hope that Greater Manchester employers will take full advantage of the opportunities that apprenticeships offer to recruit young people and train them to their own standards, and to build apprentice recruitment into their workforce and succession planning.”