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Government sticks to apprenticeship levy timetable

15th Dec 2016
Freelance journalist
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The government is pushing ahead with the implementation timetable for its flagship apprenticeship levy, and has this week published new guidance for employers.

HMRC’s guidance has been published against a backdrop of growing concern that the levy is likely to create challenges for payroll and finance departments in businesses and charities.

Employers have less than four months to prepare their payroll for the apprenticeship levy − a charge on all UK employers with an annual pay bill of £3m or more.

The UK government has estimated that about 2% of all employers will pay the levy, which starts in April and is intended to create three million apprenticeships by 2020.

The levy is charged at 0.5% of an employer’s pay bill. The government will give each employer paying the levy an allowance’ of £15,000 per year towards the cost of apprenticeships.

Business groups including the CBI, manufacturing association EEF and the Institute of Directors have called for the government to delay the levy, which is due to start in April.

The government has made some concessions to businesses, such as giving employers more time to spend their funds for apprenticeships (two years rather than 18 months).

However, business groups still think that the levy could be improved.

“While the ambition is positive, the current design does not recognise the breadth of great training currently being delivered and runs the risk of unintended consequences, including crowding out good existing training schemes in order to meet the government’s apprenticeships targets,” Seamus Nevin, head of employment and skills policy at the Institute of Directors, told AccountingWEB.

Rhiannon Jones, principal policy adviser for tax and fiscal policy, at the CBI, the employer’s group, said: ‘‘Firms still urgently need more clarity on more complex areas, such as how HMRC will reconcile settlements in the digital account and some further elements of modified payroll schemes.’’

Charities will also be affected by the levy.

Andrew O'Brien, head of policy and engagement, at the charity finance group, told AccountingWEB that the apprenticeship levy isn't designed with charities in mind. “It is going to be a significant challenge for our members, many of whom have never taken on apprentice before and are only just getting used to the lay of the land.”

But he added that with some changes the levy could help charities improve its skills and career opportunities, particularly for young people.

“…Charities need to be vigilant and make sure that they are monitoring their pay-bill carefully, and even for those not caught by the Levy yet, it may be useful to begin planning for how to use apprentices in anticipation.”

 

Will your organisation be caught up with the apprenticeship levy charges? How are you reacting to the changes?

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By psimonparsons
16th Dec 2016 08:21

Employers are not being given a £15,000 allowance towards the cost of apprenticeships. This is an offset against the levy calculation. The employer does not get this amount.

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