Are you Apprenticeship Levy Ready?

On April 6th the Apprenticeship Levy comes in to effect.  Here are some key points that form part of the Levy:

• It forms part of the government’s plan to address the UK’s skill shortage (UK productivity is 20% behind the G7 average)

• The scheme aims to create 3 million apprenticeships by 2020

• It is designed to support quality training by committing employers to its success

• The Levy will be funded by employers with a payroll (“pay bill”) of over £3 million per annum

• Employers will need to contribute 0.5% of their pay bill to the Levy

• Employers can then access their funds via a “digital account” to purchase apprenticeship training

• This must be approved training via a registered training provider

• Employer digital account contributions will be boosted by a 10% top up from the government

• Employers beneath the £3 million annual threshold will still be able to access training if they make a 10% co-payment

• The funding cannot be spent on the wages of the apprentice

In effect the Apprenticeship Levy gives employers a problem and an opportunity. Clearly it is a tax on payroll which is challenging in a global, competitive business environment. On the other hand it serves as a reminder of the potential value of apprenticeships which have been used well in a number of countries. Of course we all appreciate the long term benefits of well trained staff.