The government is committed to boosting productivity by investing in human capital. As part of this, the government is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The levy will help to deliver new apprenticeships and it will support quality training by putting employers at the centre of the system. Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.
The Apprenticeship Levy is a levy on UK employers to fund new apprenticeships. For all employers operating in the UK, the apprenticeship levy has been set at 0.5% of all company’s whose wage bill is greater than £3 million per year. Also, employers will receive £15,000 from the UK Government to offset against the levy – paid in monthly instalments of £1,250.
So, if an employer has 250 staff each earning £20,000 the levy will be 0.5% of its £5 million wage bill (£25,000), minus the £15,000 they are given as the offset. This means the levy for this business is £10,000.
To fall under the requirement of the levy, an organisation's pay bill is defined as the total earnings of all its employees. It does not include other payments, like benefits in kind.
Try our Levy Calculator tool to gain a better understanding of the amount of Levy your organisation is paying.
Employers in England will be able to claim back their levy contribution in the form of digital vouchers, which they can then use to pay for training apprenticeships. Essentially this means the levy is designed purely to encourage employers to support apprenticeships. To further encourage this, those paying the levy receive an additional 10% top-up to spend on training – meaning they can draw £1.10 for every £1.00 they put in. One final incentive to use the money for apprenticeship training is the fact that the UK Government has announced any unspent funds left in an employers’ digital accounts will expire after 24 months.
If you are looking to develop your apprenticeship and levy strategy, we can arrange an appointment to discuss the background to the levy, provide estimates on your liability and advise on potential apprenticeship pathways. If you then wish to continue with this support, there are a number of services to help you get the most from the Apprenticeship Levy.
Please contact our Team of experts on 01226 246583 for more information about how we can support your organisation.
To find out more information about the courses that Peach Orator offer your organisation to reach its full potential please follow the link below.