In his Summer 2015 Budget, the Chancellor announced the introduction of a new levy on employers to fund apprenticeships. The levy, which is likely to come into force on 1 April 2017, underpins the government’s apprenticeship reform programme. The government is committed to delivering 3 million apprenticeships in this Parliament – a 35% increase over the 2.2 million apprenticeships delivered in the last Parliament. The levy is intended to provide the funding and incentives to help deliver this commitment.
The Chancellor has confirmed that all UK employers with a total annual pay bill of £3m or more (0.5% of their total ‘payroll bill’) will be required to pay towards the national apprenticeship programme. The levy will be deducted on a monthly basis.
No. This is a mandatory tax.
You will be able to claim £15k per annum funding allowance to spend on apprenticeships training.
Detail is expected as part of the Finance Bill in spring 2016.
It is expected that levy contributions will be converted into vouchers, similar to childcare vouchers. Those vouchers must be spent on apprenticeship training provided to meet an approved apprenticeship standard. It cannot be spent on internal training or apprentices salaries or apprenticeships which are not covered by an approved standard.
The standards show what an apprentice will be doing and the skills required of them, by job role. Standards are developed by employer groups known as ‘trailblazers’. Each apprenticeship standard has an assessment plan produced by ‘trailblazers’. These standards and assessment plans will be approved by the Institute for Apprenticeships.
A new independent body led by employers which will regulate the quality of apprenticeships and have overall governance of apprenticeships. An independent Chair will lead a small Board made up primarily of employers and business leaders to ensure employers continue to drive up apprenticeship quality to the highest level. Building on the current Trailblazer processes, the Institute for Apprenticeships will put in place transparent mechanisms for the approval of apprenticeship standards and assessment plans, and maintain clear quality criteria so that only standards that are valued by employers will be approved and funded.
The government is currently undertaking a consultation with the public sector around a target of 2.3% apprenticeships by headcount.
It remains unclear how extensively suppliers to the public sector will be affected but initial indications are that suppliers may have to give an undertaking to employ one apprentice for every three to five million pounds received through any public sector contract.
An Apprenticeship Training Agency. If you are interested in employing an apprentice but cannot currently commit to the length of time needed for a full apprenticeship, an apprenticeship training agency (ATA) may be the right option for you. ATA’s recruit, employ and arrange training for apprentices on behalf of employers.
A large amount of information is now in the public domain. The Finance Bill due in spring 2016 is expected to provide the detailed workings of the apprenticeships levy. Some useful information can be found in the links below.
Still wondering what all the fuss is about and how it may affect your business? K10 is perfectly positioned to support companies as they prepare for the arrival of the apprenticeships levy next Spring.