How is your business preparing for the Apprenticeship Levy? (Part 3 of 5)

By Sam Thomas | 25th January 2016 | 7 min read

Here is part 3 of our weekly 5-part series about the top issues which we predict will affect your business in 2016, be sure to read parts one and two which looked into the National Living Wage and zero-hour contracts.

During the Autumn Statement in November 2015 the Chancellor confirmed that from April 2017, employers with a wage bill of more than £3 million will have to pay a new Apprenticeship Levy of 0.5%. The purpose of this is to fund three million new ‘high quality’ apprenticeships by 2020.

Whilst this doesn’t come into effect until 2017, it’s your businesses actions during 2016 which will determine how you will deal with the changes.

The government states that around 98% of UK businesses will be exempt from the levy, and that the 20,000-levy paying businesses will generate an estimated £3 billion a year which can be reinvested back into the apprenticeship market. All employers will also receive a £15,000 allowance to offset the payment of the levy, paid in vouchers.

The government will create the Digital Apprenticeship Service online portal, from here organisations will have access to a range of services which allow them to ‘shop’ for apprentices, as well as find accredited training providers. Training is paid for with the digital vouchers that companies paying-in will receive. All UK companies will have access to the portal, regardless of whether the business has contributed to the Apprenticeship Levy of not.

The government believes that this will create a national database of apprentices which will improve the quality and availability of apprentices, however businesses have been quick to label the levy as a ‘payroll tax’. As an example, an employer of 250 staff with a payroll of £5 million per year would pay £25,000 into the fund each year.

If your business will be eligible to pay the levy, then the earlier you prepare, the easier the transition will be. The government hopes the levy will soon become standard, as the workplace pension now is considered.

Here at IRIS, our goal is to make changes in legislation as stress-free as possible for your business. For example, did you know about the recent court cases which could result in changes to how holiday pay is worked out?

To make things easy, we offer free webinars and guides on a relevant topics in the industry. You can download your free guide about the crucial things to know about holiday pay now, and be sure to look at our range of webinars to see how IRIS can help you and your business today.