In just two weeks, control of apprenticeship funding will shift to the hands of employers through the Digital Apprenticeship Service.
The Apprenticeship Levy was launched on 06th April to all UK employers to fund new apprenticeships. This new tax will only be paid by employers with an annual paybill in excess of £3 million at a rate of 0.5% of the employer’s paybill.
Businesses will fall into one of three categories; levy paying, non-levy paying or under 50.
Small employers with less than 50 employees, recruiting a 16-18 year old apprentice will receive 100% funding for the length of the apprenticeship.
Non-Levy payers will contribute 10% towards the cost of an apprenticeship, with the government funding the remaining 90%.
Each levy-paying employer will receive an allowance of £15,000 to offset against their levy payment. Any apprentices accepted onto an apprenticeship before 01st May will be funded for the duration of the apprenticeship under the current SFA Funding rules.
The Engineering College’s CEO Terry Weston said: “The Apprenticeship Levy is hot on the Government skills agenda, but many employers remain unclear as to the impact it will have on their business. The levy is meant to fund an increase in the number and quality of apprenticeships. It will affect businesses with a payroll bill of over £3 million, roughly 2pc of businesses. Each qualifying business will pay 0.5pc of their employee payroll to the levy pot. They can then draw down against their Levy contribution against the cost of training but critically only for the training of apprentices. As a result there are significant implications to companies overall training regimes and how they need to be adapted so more workers are put through apprenticeship training.
“It is also important to understand that although money can be claimed back, there is an 24 month deadline against each monthly payment to HMRC for it to be used by the employer. If it is not claimed back and spent the Government retains the unspent contributions to support funding for the wider apprenticeship recruitment on the national level. We are therefore advising companies it is essential to plan training well in advance to ensure all money can be claimed.”
The Apprenticeship Levy is being launched by the Government in a bid to deliver a greater number of apprentices across the UK. Companies will be able to access the funding for apprenticeships through a new Apprenticeship Service account. It will pay for training and assessment for apprentices.