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In the 2015 Autumn Statement, the government announced a new
apprenticeship levy for large employers, to come into force during 2017.
What is the Apprenticeship Levy?
The apprenticeship levy is a new payroll tax
which comes into force on 1 May 2017. The tax
will be used to fund and encourage the use of
apprentices, as part of a raft of new measures
designed to help the government reach its
targets of creating 3 million new
apprenticeships by 2020.
Since the levy was first announced in the autumn of 2015, the government has carried
out a consultation on the proposed levy and published draft legislation. On the 12
August 2016, the government published further details on how the levy will operate.
The levy will be payable by all employers, operating in all sectors, across the UK.
Employers will pay 0.5% of their pay-bill into a central fund, collected via PAYE.
Employers will receive a £15,000 allowance to offset against the levy payment and so
the levy will only be paid on a pay-bill in excess of £3 million per year.
Employers who contribute to the levy can access electronic vouchers in return, which
can be used to access funding for training their own apprentices via an individual
digital account. Employers who pay the levy will be able to access more funding than
they have put in, through government top-ups of 10%. However, levy contributions
which are not accessed, will expire after 18 months.
Employers will face increased administration costs as a result of the levy and will need
to make arrangements for keeping detailed records.
What does the Apprenticeship Levy mean for you?
If you are an employer with a pay-bill in excess of £3 million per annum, then the levy
will affect your business. The impact of the levy will depend upon the plans you put in
place for workforce development and training.
If you do not employ apprentices and choose to do nothing, you will simply pay a
0.5% tax on your pay-bill.
By developing an effective workforce development and recruitment strategy, which
includes the use of apprentices, you can mitigate the effects of the levy by obtaining
value from your levy payments. The electronic vouchers that are given in exchange
for the levy payment, can be used to ‘buy’ training from a college or recognised
training provider. Alternatively, you can set up your own in-house training arm to draw
back the funding yourself.
The introduction of the employer levy in May 2017, in combination with the exemption
from employers national insurance contributions for apprentices under the age of 25
from April 2016, builds a compelling case for a talent strategy that engages young
people and builds upon a range of established apprenticeship qualifications.
How can gunnercookeConsulting help you?
At gunnercookeConsulting we have experienced consultants, with an industry
background, who are experts in workforce development strategies and in the training
and education sector.
gunnercookeConsulting can help you to:
Assess the impact of the employer levy upon your business and develop an
options appraisal to allow you to make informed decisions about how to tackle
the levy requirement;
Undertake a skills mapping for your business and develop an effective
workforce development and recruitment strategy, which takes account of the
employer levy alongside other key factors and considerations; and
Plan for the delivery of apprenticeship training for your workforce, either
through a recognised training provider or through the set-up of your own in-
house training arm.
With a wealth of experience, a breadth of expertise and genuine integrity, we work
hand-in-hand with our clients to help them become exceptional.
gunnercooke Contact:
David McIntyre, Partner
gunnercookeConsulting
53 King Street, Manchester, M2 4LQ
Tel. 07432 741812
Email. [email protected]
