What you need to know about the Levy
The world of apprenticeships is changing, and all because of the ‘levy’. So, why has the levy been introduced and what is it? What will it mean for you as an employer?
Why has a ‘levy’ been introduced?
• The government has committed to 3 million apprenticeship starts by summer 2020
• Their mechanism of choice is the Apprenticeship Levy
• It will commence 6 April 2017
• It is aimed at putting control of organisational learning and its funding in the hands of employers
What is it?
• It’s a tax on employers with UK pay bill >£3m p.a.
• It’s 0.5% of their total (gross) pay bill
• It’s collected monthly through PAYE
• There is a 10% government top up
• It will be accessed via electronic voucher
• It will only fund apprenticeship training and assessment
• It’s for all employees at all levels /ages
• It can also be used for existing employee development (“substantive new skills”)
• Spend limits set based on level and type of apprenticeship
In summary, the Levy is positioned as the government’s logical solution to funding the increase in apprenticeship numbers and putting control of funding in the hands of employers.
So what does this mean for employers?
• The Levy is not optional (for those who meet the criteria)
• It requires a medium-to-long term strategic approach
• Any unused surplus is available to other organisations (including competitors)
• An employer can allocate 10% to another employer (e.g. supply chain) after year 1
• An employer can gain additional funding at 90% when own ‘levy’ spent
• An employer will have 24 months to use their monthly ‘levy’ payment
It is well known that apprenticeships can have a real and positive impact on businesses, helping keep them ahead of the competition, boosting productivity, and increasing staff retention rates. These are facts. They are well documented, acknowledged, genuine truths and every employer, without doubt, would be eager to apply these advantages to their business.
How System Group can help
Having worked in the sector for over 20 years, providing a wide range of funded and commercially available training, System Group has a wide range of knowledge and expertise in strategic learning and development, workforce planning, talent development, government funding (including the levy), and sector knowledge. We work with organisations affected by the levy to help them align this to their organizational needs and challenges to maximize spend and help future-proof their workforce.
You may have a lot of questions about how to implement the ‘levy’ in your own business and we are here to help. Please get in touch with us to talk through your queries or how you can make the most of the ‘levy’.