Northern Skills Group - The Apprenticeship Levy

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APPRENTICESHIPS & TRAINING

THE APPRENTICESHIP LEVY What employers need to know www.northernskills.co.uk

3,000,000

The Levy in numbers…

The Government wants to increase apprenticeship provision in the UK to 3,000,000 by 2020 by making funding changes and introducing an Apprenticeship Levy.

This will affect all large employers that have a payroll in excess of £3 million.

The Levy is set at 0.5% of an employer’s wage bill and will be collected through PAYE. The first payments will be due in April 2017.

0.5% APRIL

2017

All employers will receive an allowance of £15,000 to support payment of the Levy. This will be allocated in the form of an electronic voucher that can be used to purchase training from recognised providers to new or existing staff. The Levy will need to be paid regardless of whether an employer reclaims these voucher funds for apprenticeship training.

Employers should consider the impact of the introduction of the Levy on their budgets and workforce planning.

£15,000 Employers who pay the Levy and are committed to apprenticeship training will get more than they pay in through a top up to their digital accounts.

Smaller companies can still take advantage of available government funding, which may include an employer contribution.

The Government anticipates investment in apprenticeships will double by 2020 from 2010 levels to £2.5 billion through the Levy.

£ £2.5 billion

The Apprenticeship Levy

How does this affect my business?

Is your payroll bill in excess of £3m per annum?

Yes - You pay the 0.5% Apprenticeship Levy

No - You don’t need to pay the Levy, but you will need to co-invest 10% with the Government who will cover the remaining cost

Claim government allowance of £15,000 (per annum), more can be claimed if your training costs exceed this

Are you training apprentices?

Yes - Claim e-voucher towards funding

No - Other organisations will claim e-vouchers from the Levy fund towards training their apprentices

Government top up available to digital account

Business example:

Did you know?

If you have 250 employees each with a gross salary of £20,000 your pay bill would be (250 x £20,000) £5,000,000.

Your Levy sum would be 0.5% of this total bill (0.5% x £5,000,000) £25,000.

You would deduct £15,000 from your voucher allowance (£25,000 - £15,000) which would make your total payment £10,000.

Apprenticeships are NOT just for your new recruits.

Your existing staff can be trained through an apprenticeship programme.

Impact of the Levy It is essential that employers should consider the impact of the introduction of the Apprenticeship Levy on their budgets and work force planning. A review of the skills needed within your business might also help you make the most of the Levy payments and increase the skill set of your workforce.

Why should your business support apprenticeships?

1

2

3

Invest in managers of the future

Increase business growth

Attract new talent

Many apprentices go on to managerial roles within an organisations

72% of businesses employing apprentices report improved productivity

Talent that can support your organisation’s working practices

Statistics provided by the National Apprenticeship Service

4

Boost the local economy 81% of consumers prefer businesses that employ apprentices

Telephone: 03453 40 40 40 • Email: info@northernskills.co.uk

How will the Levy benefit my business?

Characterised by both the CBI employers’ group and the Institute of Directors as little more than a ‘Payroll Tax’, the Apprenticeship Levy will bring England in line with other European economies, where the co-funding of apprenticeships between employers and government is standard practice. The Government wants employers to have more control in what goes into an apprenticeship, and new Trailblazer standards will begin to replace existing frameworks by 2017, in line with the Levy.

A key benefit of the Apprenticeship Levy is that apprenticeship funding is placed back into the employers hands. This means that you’ll be able to recruit more apprentices when needed, and further invest in your current apprentices and existing staff through higher qualifications. There will be no age limit on funding available for apprenticeship training.

The ability to reclaim your Levy costs may give you the opportunity to take more out than you’ve put in.

The amount you can claim is calculated via your PAYE return, and it is possible to claim back more than you originally paid. Northern Skills Groups is a recognised training provider which means you’ll be able to reclaim back your apprenticeship allowance through a number of different apprenticeship frameworks. The e-voucher system ensures the funding process isn’t open to abuse, and the money secured from the Levy will only go to organisations committed to the value of apprenticeships.

What do I need to do?

To get started, you’ll need to update your businesses’ payroll software to take into account the new rule exempting organisations from Class 1 NICs for apprentices under the age of 25. The Apprenticeship Levy will be collected via the PAYE system on a monthly basis using the existing RTI setup. Impact assessments are currently being taken by HMRC to ascertain the level of extra cost this might add to your administration bills which will be taken into consideration. The Levy will be subject to the same limits, penalties and appeal procedures as income tax.

Once you have received your e-voucher allowance, you will have up to two years to claim back funding for this training before smaller organisations are able to access it. You can register for your digital account from January 2017.

How will the Levy benefit smaller businesses?

If your wage bill is less than £3 million per annum, you still may be able to access vouchers. Money left unclaimed by those organisations that put in will be made available to smaller businesses to claim towards their apprenticeship training via the e-voucher system. Employers with less than 50 employees will be able to train 16-18 year old apprentices without making a contribution to training and assessment costs.

Want further advice?

Northern Skills Group has a dedicated Business Advice Team who can offer your organisation further advice and guidance on the new Apprenticeship Levy and how these funding changes can be used to benefit your business needs.

The information supplied in this booklet is subject to Government change

To arrange a chat or company visit with a Business Advisor: Call: 03453 40 40 40 • Email: info@northernskills.co.uk