Businesses getting to grips with apprenticeship levy

January 2019

Businesses are finally beginning to understand the apprenticeship levy, after previously voicing serious concerns over its complexity and lack of flexibility.

The apprenticeship levy took effect on 6 April 2017 and means businesses with an annual pay bill of more than £3 million must pay the levy towards apprenticeship funding.

It is charged at 0.5% of an employer’s annual pay bill and each employer receives an allowance of £15,000 to offset against their levy payment.

Business groups, including the Institute of Directors (IoD), urged the Government to address ongoing problems with the levy – and it attempted to do so by announcing a package of reforms in Budget 2018.

Levy-paying businesses can transfer up to 10% of their training funds to other employers in their supply chain in 2018/19, and this will increase to 25% from April 2019.

Research from the IoD shows that since Budget 2018, 51% of 1,141 employers “perfectly” understand the levy – compared to just 36% in March 2018.

Stephen Martin, director-general of the IoD, said:

“These figures suggest that the creases are being ironed out[with the apprenticeship levy].

“Greater opportunity to transfer levy funds is a step in the right direction, and ensuring smaller enterprises are in a position to take advantage of this come April must now be the focus.”

However, 60% of business leaders surveyed were unaware of the changes revealed by Chancellor Philip Hammond.

In addition, 10% of employers did not understand how to reclaim funding and 4% did not know how to pay the apprenticeship levy.

Speak to us about the apprenticeship levy.
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