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
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
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