As of April 2017, employers with a PAYE over £3m will contribute with 0.5% of their payroll into an apprenticeships fund. Despite some concerns over the lack of details about the program, it seems to be a game-changer in the educational landscape of the UK. Ultimately, it will be an opportunity for every organisation to build a more skilled workforce – and a more productive business.
The new levy announced in 2015, was created to support the existing government funding for apprenticeship training. According to Chancellor Osborne, this initiative will raise £3bn a year over the next five years, and will help deliver 3 million apprenticeships by 2020.
While quantity doesn’t necessarily mean quality, this measure will be paired with more rigorous apprenticeship standards (The Trailblazer Initiative), and with the creation of a new independent regulatory body led by employers. This will hopefully meet their ambitions for improvement in training quality while growing in numbers.
The Treasury’s Productivity Plan also promises to bring the levy under employers’ control, enabling them to direct the funding through the Digital Apprenticeship Service to ensure the quality of training they need.
How will it work?
- Companies with a payroll over £3 million will pay 0.5% of their employers’ pay bill into the levy fund, regardless of their current apprenticeships programs.
- This tax will then be funneled and ring-fenced in the form of an electronic voucher that employers can use to purchase training from recognised providers .
- All organisations will be entitled to claim £15,000 p/annum for apprenticeships training, regardless of their size and PAYE. If companies don’t use this allowance, they will be unable to use it for any other purpose.
- The first levy payments will be due in April 2017 and paid through Pay As You Earn. HMRC will work with employers and payroll service providers to simplify the implementation of these changes.
How will levy benefit organizations?
Efficient staff equals profitable business. In this sense, the levy incentivises corporations to think about the long-term development of their human resources and exponentially benefit from this initiative.
Among other advantages, it will allow organisations to:
- Professionally train and upskill existing or new staff;
- Get more qualified and efficient manpower;
- Build a talent pipeline for the expansion of their businesses;
- Increase their HR retention rates;
- Increase productivity and profitability;
- See a significant return on investment within the first year of taking on new apprentices;
- Deliver a better brand experience to their customers;
As it seems, the new levy will allow corporations to build new and stronger workforce generations. If fairly conducted, it has the potential to boost the growth of key sectors and industries and – ultimately – to change the educational landscape of the UK.
To learn more about the levy or our apprenticeships programmes, call us on 03333 110 157 or email apprenticeships@F2Latwork.org.uk