Getting the most out of the Apprenticeship Levy

Aimed at adding 3 million apprenticeships by 2020,  the Apprenticeship Levy came into effect  on 6th April . In an industry facing major staffing issues and skills shortages this is an opportunity to attract new talent. According to People1st.co.uk the benefits of apprenticeships are, “80% of companies who invest in apprentices report an increase in staff retention. Apprentices deliver an average of £10k per annum in productivity gains. 77% of employers believe apprenticeships make them more competitive.”

The government is encouraging not just apprentices but employers.  Backing will be provided for external training, and to set up internal training aimed at progressing staff within the company.

HM Revenue and Customs are stressing the importance of this. According to the policy paper Apprenticeship Levy (4 February 2016), 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.”

Quick overview – what is the Apprenticeship Levy?

  • The Levy is applicable if you have annual pay bills of more than £3 million, and is charged at 0.5% of the annual pay bill
  • It gives employers an allowance of £15,000 to offset against their payment, with payments scheduled to start in May 2017.
  •  The new funding for apprenticeships, termed “co-investing”, will require 10% of the cost to come from employers with the remaining 90% coming from government.
  •  A 10% top up will be added to funds spent on apprenticeship training.
  • Control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service, an online apprenticeship service account.
  • Funds will expire 24 months after they enter the apprenticeship service account, giving a grace period to set up training.
  • For simplicity, the Levy will be paid and monitored through employer’s normal payroll processes.
  • Payments through the Apprenticeship Levy will be deductible as expenses for Corporation Tax.
  • The apprenticeships themselves are being reformed and employers are being given the opportunity to have input into the apprenticeship standards. The Department for Education’s Guidance for employers about being apprenticeship training providers (February 2017) says “. It enables you to directly design and deliver the content of the off the job training which your own apprentices will receive, giving you the ability to make sure it includes everything you think it should.”

So, how to make the most of the new legislation?

  • Offer potential apprentices a clearly laid out path towards skill development and a career
  • Engage with training providers near you – you can now negotiate with them to shape the training they provide and what you pay for
  • Consider becoming a training provider – by tailoring courses to your own needs as an employer, you produce the staff you desire, while offering an “earn as you learn” career path. This can become an important part of the overall branding of your organisation, corporate image and culture. In turn leading to filling skill gaps at all levels, and improving staff retention.
  • Make the most of the 24 months for which the Levy funding is available – it allows you time to pick and choose the best path to follow, or to combine them
  • There is already a skill gap in the industry, which looks set to grow with the impact of “Brexit”, so it’s more important than ever to attract the talent you need. Target advertising to make applicants aware of the opportunities on offer with you
  • Focus your recruitment, offering a simple application process with a quick response. Make sure it’s all accessible via multi device platforms
  • There’s going to be a lot of competition for good apprentices. Use your branding, images and video to help candidates discover more about your company culture, and ensuring that you stand out in the market.

With rising costs in formal education, more young people are investigating apprenticeship as an alternative, and with the legislation and levy now underway, this is the perfect time to kick start your investment in apprenticeships.

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