Talks over the new Apprenticeship Levy in the UK have been going back and forth for so long, it has been hard for many SMEs to keep up. What impact will it have on your business? How can you take advantage of the changes that will take place?
Here, we look at the key facts we know about the Apprenticeship Levy so far, and how they could impact your business.
The Apprenticeship Levy is a new government initiative aimed at encouraging larger businesses to optimise the potential within an apprenticeship program. Starting in April 2017, companies with an annual wage bill of over £3 million will enter the scheme.
The levy is currently expected to amount to an annual charge equal to 0.5% of the cost of payroll, minus a £15,000 levy allowance. It will be collected monthly via PAYE and deposited into the company’s own Online Digital Apprenticeship Services Account.
For every pound paid into the account by the company, the Government will add an additional 10% bonus to the fund. The company is then free to draw on these monies, with a view to developing or improving the opportunities for apprenticeships within their organisation.
Financial Details
Under the scheme, costs for all apprenticeship training will be agreed upfront, directly with the service provider, and will be spread over the life of the apprenticeship.
The unused deposits within the Apprenticeship Levy will also be used by the Government to fund apprenticeship schemes within SMEs.
It has been indicated that contributions could be as much as £2 for every £1 paid by the company. Some speculate that the level could be even higher. There may even be a bonus payable for SMEs on completion of a successful apprenticeship course.
In addition, the Government is considering allowing larger companies to fund training within SMEs in their supply chain under this initiative, further improving the benefit to Small and Medium Sized Enterprises.
Such an initiative is also likely to highlight the benefit of apprenticeships for any size of business, and make it easier for SMEs to gain valuable resources through this scheme.
Business owners will now be able to have more flexibility when choosing the trainers that will deliver the education required. As a result this training can be focussed on the most important areas for each specific business.
Act Now to Ensure You Qualify
Whilst there has been some talk of the levy being delayed or even abandoned post Brexit, current views of those close to the implementation do not believe this is likely. Confirmation of the final details of the Apprenticeship Levy is expected in October 2016. However, now is the time to act for your business.
Interested in finding out more? Come along to one of our seminars to understand just how you can get the maximum benefit from these changes.
*UPDATE*
As of 12 August 2016, new announcements have been confirmed regarding the consultation. The Government has revealed that businesses have until September to feedback their views on the plans before the final support package will be confirmed in October 2016. Click here for more information about the apprenticeship levy and how to feedback your views.
