The apprenticeship levy will come into effect from April 2017. With 40% of firms saying they’re unsure about the levy, we thought it would be worth sharing a round-up of the facts.
The apprenticeship levy will offer individuals the chance to learn new skills and access new career paths. It aims to increase the focus on employee training outside the workplace through businesses investing in the scheme.
3 benefits of the apprenticeship levy
- Employers can create a new talent pool for their business by identifying areas in their organisation that need new skills or training and hire apprentices based on their company needs.
- Increasing apprenticeships will diversify the range of skills available in the workforce addressing skill shortages that exist in the current market.
- The levy enables existing employees to retrain and explore new job opportunities previously not available.
Will your business have to invest?
The current government guidelines state organisations with a payroll of £3 million and upwards will have to pay the equivalent of 0.5% of their payroll towards the levy starting from May 2017. However, all firms will receive an allowance of £15,000.
An employer with an annual payroll bill of £5 million:
- Levy sum: 0.5% x £5,000,000 = £25,000
- Allowance: £25,000 – 15,000 = £10,000 annual payment
Employers who pay the levy will also receive a 10% topup from the government towards their monthly contributions.
How to access the scheme?
To access the new digital apprentice service account, employers will have to declare their levy payments to the HMRC. In return for investment into the apprenticeship levy, employers will receive digital vouchers to pay for training apprentices. Employers will have 24 months to spend the vouchers before they expire.
Employers will use the digital apprenticeship service to:
- Choose an apprenticeship standard
- Select the apprenticeship training provider
- Select the organisation that will assess their apprenticeship
What can the vouchers be spent on?
With an approved provider, digital account funds can be used for apprenticeship training and assessment.
Employers can use the funds to train existing or new employees at apprenticeship levels higher, lower or equal to any existing qualifications they may have.
After an organisation has hired an apprentice through the digital system, funds will be deducted from the company’s digital account on a monthly basis.
Who can be an apprentice?
An apprentice can be any age, an existing employee or a new hire. This is completely up to the employer, however, there are a few mandatory rules:
- The training must last at least 12 months long
- The apprentice must spend at least 20% of their time on ‘off the job’ training
- The apprentice must be working towards a government approved standard or framework
Of course, there are also challenges associated with the apprenticeship levy. Watch this space for my next blog discussing potential drawbacks of the levy.
Will the apprenticeship levy benefit your company? What skills are most valuable in your industry? We would love to hear from you in the comments! Click here to learn how to successfully transfer skills across your organisation.