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Demystifying the Apprenticeships Levy

What is an apprenticeship and how does it work?

Apprenticeships are designed to help people earn a wage and learn at the same time, receiving on-the-job training to develop and hone skills they need to perform their role. Normally lasting up to a year or more depending on the level of qualification. Apprenticeships are not only available to school leavers but also to individuals who have changed their role at work and need additional training.

Demystifying the Levy: How are apprenticeships funded?

The levy was introduced in April 2017 with the aim to encourage employers to invest in apprenticeship training. The Apprenticeships Levy applies to both public and private employers across all sectors in the UK. The government provides support to all employers offering £15,000 fix annual allowance offset against the levy to spend on training.

As an employer monthly levy payments are made through PAYE taken by HMRC. Set at a rate of 0.5% of the total payroll of an organisation, this means that only when your company has a payroll over £3million per annum, will you have to contribute to pay the levy. The 0.5% tax helps fund towards the government’s plans to introduce 3 million new apprenticeships by 2020. The tax payments taken is then put into a levy pot for you to manage your finances with the support of a registered training provider to help you spend and deliver apprenticeships.

As an employer it is up to you to decide how you might want to offer your apprenticeships. Existing employees who have entered a new role are suitable for an apprenticeship or you may choose to hire a new recruit and completely train them from scratch, both options being beneficial. A skills development plan would need to be created.

The Levy offers the opportunity for businesses to review workforce development strategies and helps discover how apprenticeships can deliver the skills that your workforce needs now and in the future. It is important to consider the levy as an investment towards the long-term health of your business and not just a form of cumulative tax.

To find out more about apprenticeship standards visit: www.gov.uk

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