What is an apprenticeship levy?
The apprenticeship levy is a tax here in the UK, which can be used to fund apprenticeship training programs. This affects all employers with an annual wage bill of more than £3 million so only less than 2 percent of UK employers will pay it.
The control of apprenticeship funding will be up to the employers. The levy will be charged at a rate of 0.5 percent of the employers wage bill. Each employer will receive an allowance of £15,000 to offset against their levy payment.
The government introduced it in 2017; as a plan to boost productivity of human capital in the UK and increase the quality and quantity of apprenticeships. The goal is to have 3million new apprenticeship starts by the year 2020.
What can apprenticeship levy funds pay for?
The apprenticeship funds pay for training and assessments. However the wages, travel costs, work placement statutory licences to practice, traineeships and the cost of setting up an apprenticeship programme must be paid by the employer.
What if my business doesn’t have to pay the levy
If your business doesn’t have to pay the levy you can still get support from the government for the hiring and training of apprenticeships. You will need to agree to a payment plan from a provider and you will have to pay 10 percent of the course fees. The government will pay the remaining 90 percent. This cost varies depending on the type of apprenticeship and with funding band the apprenticeship falls into.
I run a small business. What’s the incentive for me?
The government will pay the total cost for apprenticeships between 16 and 18 years of age. For apprenticeships aged 19 or over the government will pay 90 percent of the cost. This only applies to businesses with less than 50 employees.
Apprentices aged 19 to 24 from disadvantaged backgrounds or with learning needs will receive full payment from the government.
Also all employers will receive an additional £1000 for taking on an apprentice between 16 and 18.
This also applies to apprentices from disadvantaged backgrounds or those with learning needs.
How should I pay for the training?
You pay monthly to HMRC (revenue and customs). Businesses are required to calculate and report what they owe each month.
Who provides the training for the apprentices?
You are free to select the training provider on your own. However if you are accessing the funds through the government then you can only use approved providers.
If you’d like to learn more about the Apprenticeship Levy you can find it here.
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