Coming into effect from April 2017, the obligatory apprenticeship levy applies to all UK employers. Businesses with an annual pay bill over £3 million, will be required to contribute 0.5% of their bill, as an additional tax through PAYE.
An allowance of £15,000 against the levy is available to each employer. To reiterate, those with a pay bill of less than £3 million, will in fact pay nothing.
Connected companies are only entitled to one allowance and payment will be monthly with the money sitting in a Digital Apprentice Services Account.
The English government has also committed to contributing an extra 10% on top of payments made, with the money being available to use for 24 months before expiring. The money in this account will only be available for paying towards government approved apprenticeship training and assessments.
There is a new Apprenticeship Service that will be launched officially in May 2017 to accompany this levy, with some services being available to all employers, not just those that have to pay the levy.
The government expects that in the future all apprenticeship training and assessments will have to be put through the apprenticeship service and from 2018, employers will be able to transfer up to 10% of the levy funds in their digital account each year to another employer with an account. This will allow employers to support their supply chain or other employers in their sector or community.
As with all new legislation, the specifics surrounding the levy are likely to change and it is still unsure how the Scottish, Welsh and Northern Irish apprentice arrangements will work, and how this will affect companies with branches within those countries.
By Louise Addison