MTC Apprenticeships

Apprenticeship Levy

What is the Apprenticeship Levy?


The government’s agenda is to increase apprenticeship starts to three million by 2020 – the levy is the ‘logical solution’ to funding that increase. Driven by their productivity agenda, the government is committed to pressing ahead with the introduction of more rigorous apprenticeship standards (The Trailblazer Initiative). Financing this commitment to a step change in the quality and standards of apprenticeship training would have been challenging enough by itself. However, it also comes coupled with a high-profile Conservative manifesto commitment to provide three million apprenticeships over the five-year term of government – which if achieved will be 30% more than was achieved in the previous five years.

At this point, many firms are concerned about the financial implications the levy will have for their business. However, those who pay in and are committed to creating high quality training schemes within their organisation will benefit, and will be able to claim back more than they contribute.

The rate of 0.5% has been set to deliver the increase in quality that business have been asking for while ensuring it does not place an unreasonable burden on employers. This will put the funding of high-quality apprenticeship training on a sustainable footing. Unlike normal taxation, employers can get back the funds that are levied by investing in a sufficient amount of apprenticeship training. Combined with additional reforms which are already underway to improve Apprenticeship quality and quantity.

Apprenticeships have been given equal legal treatment to degrees, and from April 2016 businesses are no longer required to pay National Insurance Contributions for apprentices aged under 25. Apprenticeship targets of 2.3% of headcount have also been set for public sector bodies. The public sector will be able to draw down levy funding like any other employer.


Apprenticeship Levy Facts


Organisations with an annual salary of 3 million pounds or over

If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017
You can only use funds in your account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England
You can’t use funds in your account to pay for other costs associated with your apprentices (such as wages, statutory licences to practise, travel and subsidiary costs, work placement programmes or the setting up of an apprenticeship programme).
Can use apprenticeship training for newly recruited apprentices and/or to up skill existing staff as apprentices
Choose a training provider
Agree a price and payment schedule
Pay for training and assessment with funds through your apprenticeship service digital account
Minimum of 20% off-the-job training required for the duration of the apprenticeship
Will receive a £1,000 incentive for employing a 16 to 18-year-old apprentice

Organisations with less than an annual salary of 3 million pounds or over (non-levy)

From May 2017, you will pay 10% towards to the cost of apprenticeship training and government will pay the rest (90%)
Can use apprenticeship training for newly recruited apprentices and/or to up skill existing staff as apprentices
Choose a training provider
Agree a price and payment schedule
Agree a payment schedule with the provider and pay them directly for the training
Minimum of 20% off-the-job training required for the duration of the apprenticeship
Will receive a £1,000 incentive for employing a 16 to 18-year-old apprentice

Small Businesses and Sole Traders

Will receive a £1,000 incentive for employing a 16 to 18 year old apprentice
Must pay a 10% contribution for apprenticeship training delivery for any member of staff over the age of 18
Can use apprenticeship training for newly recruited apprentices and/or to up skill existing staff as apprentices
Choose a training provider
If you recruit a 16-18 year old apprentice, you also receive 100% government funded training if you have 50 or less employees
Minimum of 20% off-the-job training required for the duration of the apprenticeship

If you would like a free consultation please contact us and we will arrange this with you.

 

Telephone

   To book or for further information, please telephone 0191 515 3355 or e-mail us at sales@mtc-training.co.uk