News & Views

Government announces more detail on apprenticeship levy scheme

PD
BY Paul Deans
Employment law
BG Purple

The government has recently announced more detail on the major changes it is planning to apprenticeship funding. The Apprenticeship Levy was announced in the 2015 summer budget to help the government meet its target of creating three million new apprenticeships by 2020. The scheme will come into force in April 2017 with the aim of increasing the quantity and quality of apprenticeships currently provided.

So how does the Apprenticeship Levy work? Well, it seems simple at first glance. Employers with a wage bill of more than £3 million per year will have to pay a levy of 0.5% of their annual wage bill to the scheme through the PAYE system. If they provide apprenticeships, they will be able to claim back their Apprenticeship Levy contributions as digital vouchers which they can use to help pay for apprentice training. If the employer takes on more apprentices than their contributions can cover, they will be able to apply for top-up payments. Employers whose wage bill is below the threshold will also be able to claim vouchers for training, although it is not yet clear how this will work in practice.

However, for employers in Scotland, Wales and Northern Ireland there is a catch. While contribution to the levy will be UK wide, access to the fund through digital vouchers will be restricted to English companies only. This is because the administration of apprenticeships is a devolved matter. Scottish, Welsh and Northern Irish companies won’t lose out altogether though. The Westminster government has said that £0.5 billion from the levy will be allocated across Scotland, Wales and Northern Ireland. Each respective regional government will then liaise with Westminster to confirm arrangements as to how allocated funds will be spent.

The information provided thus far has been limited; the general consensus is that the plans are not clear enough for employers, regardless of where they are situated in the UK. It is expected that the government will release further information in relation to the scheme in the summer of 2016.  Employers who regularly take on an apprentices should be aware that they will continue to receive funding under the current system for any apprentice taken on before April 2017 and that that funding will last for the duration of the apprenticeship.

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