New levy on apprenticeships

26 October 2016

The Government is proceeding with its plans to introduce an apprenticeship levy from 6 April 2017. Currently, funding is available from the government for training and employers pay the apprentice’s salary during their placement.

Lewis Couth, senior solicitor, takes a look at what the changes will mean to employers.

The Government is proceeding with its plans to introduce an apprenticeship levy from 6 April 2017. Currently, funding is available from the government for training and employers pay the apprentice’s salary during their placement.

So, what will the changes bring?

If you are an employer operating in the UK with an annual pay bill of more than £3 million, which is less than 2% of all UK employers, according to the Government, you will be required to pay 0.5% of your annual wage bill towards the cost of apprenticeships. The funds will then be available to employers via a Digital Apprentice Service (DAS). This is an online system to fund apprenticeships with approved training providers.

For those employers who will not pay the levy, you won’t need to use the digital service until 2018. However, you will be asked to make a financial contribution towards training which will be paid directly to the provider. The cost is likely to be 90% government funded, with the employer providing 10%, but will be confirmed later in the year.

The new guidance also includes information on funding bands which cap the maximum amount of digital funds a levy-paying employer can use towards an individual apprenticeship and has confirmed that employers will be given the opportunity to provide apprenticeship training to their own apprentices, and those of other employers. However, this is subject to complying with various rules, including formal registration.

HMRC has published a consultation on the draft regulations, which deals with the calculation, reporting and collection of the levy. The consultation is open until 14 November, and so we can expect further information in due course.

Despite the implementation date looming, much of the detail as to how the levy itself will actually work remains to be seen, including detail on aspects such as eligibility rules, i.e. who can employers spend funding on, how many apprenticeships can you get support for etc. We do expect the Government to provide full details of eligibility and funding information by the end of the year.


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