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What the apprenticeship levy means for you

Tuesday 4th October, 2016

From May 2017 any business with a gross annual payroll in excess of £3m will be required to pay a 0.5 per cent apprenticeship levy. If your business is one of them, Matt Tudor of Bridgwater Chamber of Commerce member Bridgwater and Taunton College, can talk you through how to maximise the positives.

You’ve probably read in the press about the government’s commitment to build and up-skill the UK workforce via robust, industry-driven Apprenticeships. As a result, the way in which Apprenticeships are funded is changing, and I thought it might be helpful to highlight the main changes so you can ensure that the positive impact on your business is optimised.

From 1 May 2017 all employers, whether they already employ apprentices or not,  will be required to pay a new Apprenticeship Levy of 0.5 per cent of their gross annual payroll, which will be taken by HMRC alongside tax and NI. However, the government will also offer all employers a £15,000 allowance to offset against their Levy liability, which effectively means that only employers with a gross annual payroll in excess of £3m – less than 2 per cent of employers nationwide – will be required to pay it.

The aim of the Levy is to increase UK employers’ commitment to, and investment in, Apprenticeships, and the Levy that you pay will be made available to you to fund Apprenticeship training. The government will also add a 10 per cent ‘bonus’, thereby guaranteeing that you’ll have access to more levy funds than you actually put in. Apprenticeships for 16-18 year olds will attract an additional payment to employers of £1000 per apprentice, in recognition of the extra support this age group may need in order to achieve.

The Levy is compulsory, so it makes sense to use it to optimum effect. You’ll be free to seek out and negotiate Apprenticeship training with the training provider of your choice, and the number of apprentices that you can fund with your Levy, whether they be new or existing employees, will depend on the training you require – all Apprenticeship standards and frameworks will be allocated to one of 15 funding bands, with upper limits ranging from £1,500 to £27,000.

If you wish to fund Apprenticeship training in excess of your Levy pot, the government will support this by funding 90 per cent of the cost, up to the upper limit of the relevant funding band. If, for any reason, you decide to access training that exceeds the upper limit of the relevant funding band you may do so – but the government will not fund any part of the excess.

The above proposals are currently out for consultation but are expected to come into force on 1 May 2017 as set out above. I recognise that they may seem complex, but we are here to help – the team at Bridgwater and Taunton College is one of the largest Apprenticeship providers in the South West and is highly experienced in the development and delivery of Apprenticeship programmes.

We have won a number of prestigious national awards, including a recent Queen’s Anniversary Prize for Higher and Further Education, for the ways in which we have worked in partnership with employers to upskill the local workforce in preparation for the wealth of supply chain and other opportunities coming to our region.

I would be delighted to discuss Apprenticeships with you and help you to maximise the benefits of your Levy pot. Contact me on 01278 655111 or via email at [email protected]

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