This week, the Government’s long awaited Apprenticeship Levy came into force.  Under the new arrangements, any business with a pay bill of more than £3m a year will have to pay 0.5% of their payroll costs towards the levy.  That includes the public sector, not-for-profit organisations, charities and schools. 

The levy is 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.  Levy payers will gain access to the government’s Apprenticeship Service Account, which will enable them to utilise the funds they’ve paid in - plus a 10% top-up contribution from the government - for training and development. There’s also a £15,000 allowance available for each tax year, which can be used to offset Levy payments, which operates on a monthly basis and accumulates over the course of the year.

Many businesses have been planning for the introduction of the levy for months, but several recent surveys, including one from the British Chambers of Commerce have reported that significant numbers of employers were not aware of the levy, or had no plans to recoup any of the levy contribution that they will have to pay.

Jayne Worthington, Managing Director of Greater Manchester’s largest apprenticeship training provider, The Skills Company, said:  “The introduction of the Apprenticeship Levy marks a significant change in the way that vocational training in this country will be funded.  Employers who are in scope of the levy will have to pay whether or not they have an apprenticeship programme.  Businesses with an annual pay bill of less that £3m won’t have to pay the levy but will still be able to access government support for their apprenticeship training as before, but they will have to contribute 10% of the cost of training.

“Employers will be able to recruit and train new apprentices with levy funding, but they can also use the funds to progress and train their existing staff through apprenticeship routes.  We can advise companies on how to get the maximum return on their levy investment, whilst at the same time refreshing and upskilling their workforce.

“The levy system can be quite complex. so if there are companies out there who are unsure if the Apprenticeship Levy will affect them, or want advice on how to get the most out of the new arrangements, they can contact The Skills Company at levy@theskillsco.com or give us a call on 0161 233 2656.