Following a recent Resourcing Think Tank titled ‘Responding to the Apprenticeship Levy’, we wanted to provide a simple resource to answer all your questions around what the Levy actually means. Kate Temple-Brown, Apprenticeship Levy consultant and enthusiast, addresses the key headlines of the Levy below:
Apprenticeship Levy – the background
- From April 2017 a new tax is being introduced for those firms spending more than £3,000,000 on PAYE
- The first payment of your levy will be paid direct to HMRC on April 6th 2017 and monthly thereafter.
- The Apprenticeship Levy – it is still happening despite Brexit
- The purpose of the levy is to “develop vocational skills, and to increase the quantity and quality of apprenticeships”
- The government has committed to an additional 3 million apprenticeships in England by 2020
- To achieve its objectives the Government needs to generate considerable revenue to distribute to SMEs in particular to encourage the hiring of Apprenticeships; it also needs to encourage bigger companies to look sympathetically at Apprenticeships
What is an Apprenticeship?
- The eligibility criteria has changed, An Apprenticeship is:
- A modular programme of learning that lasts a minimum of 12 months and a day
- Available to anyone of any age, for existing or new employees at any level
- A nationally recognised and accredited course – “Standard”
- Organisations can work together to create a Trailblazer standard if relevant standards do not currently exist
- No longer only available to those who have not already studied at a higher education level. As long as the subject of the apprenticeship is different subject to the degree
- Achieved by on the job training and at least 20% off the job study
- Assessed at the end of the program by certified assessors against standards
- The level of learning can vary from GCSE (2) to Masters Level (7)
Spending your Levy
- The Levy is only allowed to be spent on Training and Development of Apprentices.
- Your Levy pot will be transferred into digital vouchers that will sit in a digital account – DAS
- An employee must partner with Registered Training Providers who are able to access the digital vouchers via the Digital Apprenticeship Service website
- Eligible learners must have an HMRC recognised English Postcode
- Digital vouchers have a 24 month life after which they will be transferred to the government’s central funding post to be distributed to other employees
- In 2018 10% of your levy may be spent on training and developing employees of your suppliers who currently do not pay the levy
- Each different level and standard has a recommended funding cap which was decreed by the Government. Determined by level and subject, the cost of training is between £5,000-£27,000
What does the Levy mean for existing employees?
- With the new Apprenticeship reforms, employers can spend their levy on existing employees at any level of seniority
- Par learning eligibility has been changed so that employees with a degree can now study an apprenticeship in any different subject to their degree
- There are new level 5 and 7 (Masters) Leadership and Management Apprenticeship Standards that can be used as Management Development Courses certified by both CMI and ILM
- These are known as Higher Apprenticeships
- Once employers have spent their Levy, they are eligible to Government funding totalling £9 in every £10 of training costs
- Organisations will not pay the NI contribution of any employees under 25 who are studying on an apprenticeship standard. That will save you13% of their salary.
For further information on the Levy including a deeper dive into how it will work, the impact it’s likely to have, and the sorts of questions you should be asking your business please click here.