With the apprenticeship levy due to come into effect on 6 April 2017, apprenticeships have been making recent headlines. On Wednesday The Times published an article with the bold title "Apprentices to be mandarins of the future", following Whitehall's confirmation that it recruited 725 higher apprentices last year.

From April 2017, all employers in the UK with a pay bill of over £3 million each year will be required to contribute to a new apprenticeship levy. The levy sum will be 10 per cent of their annual pay bill and will apply whether or not the employer has any apprentices. A 'levy allowance' of £15,000 will apply to each employer to reduce the levy payment and the government has committed to providing a top up of 10 per cent of the levy contribution.

Once employers have declared the levy to HMRC they will be able to access funding for apprenticeships through their account on the digital apprenticeship service. Employers can register for an account ahead of the changes.

The level of funding that will enter an employer's account each month will be calculated as:

  • Monthly levy paid to HMRC
  • Multiplied by the proportion of the employer's pay bill paid to their workforce living in England
  • Plus the 10 per cent government top-up on this amount

Whilst some critics have argued that the apprenticeship levy is just an additional employment tax, the Government has stated that the main aim is to support employers in growing the quality and number of apprenticeships in their own workforce. However, initially at least, levy-paying employers will be able to transfer up to 10 per cent of the annual value of funds to other employers or Apprenticeship Training Agencies. If employers do not use the money in their account within 24 months, the sums will be reclaimed by the Government.

Employers looking to employ apprentices should note that, if they are in a sector which has an approved apprenticeship standard, they must use a prescribed form of "approved English apprenticeship agreement" which complies with the conditions set out in the Apprenticeships, Skills, Children and Learning Act 2009.

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