After the hiatus created by the EU referendum vote, the UK Government finally published its long-awaited update on how employers will deal with the upcoming apprenticeship levy, as well as how they access funding and how they work with training providers.
For a more simple introduction to the apprenticeship levy, visit our The apprenticeship levy page.
The updates were published on 12 Aug 2016. Here’s everything you need to know:
After 6th April 2017, all employers with a payroll of £3m or more are required to pay a 0.5% levy that can be used to invest in apprenticeship training. A £15,000 pa allowance (paid monthly) will be given to employers to offset against this.
All UK employers that need to pay the levy must declare themselves to the HMRC by 22nd May 2017. Levy payments will now count towards corporation tax deductions, and firms will be able to access their funding from 1 May 2017. As apprenticeships are a devolved policy, managed differently in England, Scotland, Wales and Northern Ireland, it was previously unclear how funding could be accessed by firms with offices in different regions. The UK Government now says it plans to use data on the home addresses of employees, to determine, for example, the proportion of an organisation’s pay bill that is paid to employees living in England. Employers will be able to update their employees’ addresses as part of their existing Real Time Information returns.
The proposal for a 10% top-up to funds available for spending on training in England has been confirmed – meaning for every £1 of levy paid, firms get £1.10 to spend. However, any funds (including top-ups) accrued-for, but not spent-on, training will expire after 18 months. To allay worries employers might forget about this, the UK Government has said it will let employers know in ‘good time’ when their funds will expire, so that they still have time to spend them. To employers that don’t want to spend their training fund on their own staff, but who instead want to ‘donate’ it to employers in their supply chain, it has been confirmed that views are now being sought about whether to let 10% of an employers’ fund to be transferrable, from 2018. Also confirmed is letting levy-paying employers in an already-designated group of companies being able to pool their funds together, to form one large digital account.
Consultations on how funding will work in Scotland, Wales and Northern Ireland are still taking place. The UK Government recommends that employers with operations in Scotland, Wales or Northern Ireland contact their apprenticeship authority if they have any questions.
Training can be bought from 1 May onwards, payable monthly to training providers. It was previously unclear how the levy would impact procurement of apprenticeship training for employers with a wage bill of less than £3million pa (which the ONS itself estimated to be 98% of all organisations). But, what’s now been proposed is that those under this salary threshold will only pay 10% towards the cost of training apprentices, with the UK Government paying the remaining 90%. For levy-paying employers, it’s also proposed that if what’s built up in their digital account doesn’t fully pay for the training an apprentice needs, government will subsidise 90% of the additional expense needed for the training to be completed. It’s still the case that employers agree a price of their training with a provider, and pay them directly through their digital account. To help businesses plan their training costs, every apprenticeship framework and standard will be given a funding band. The upper limit of the funding band will cap the maximum price that UK Government will ‘co-invest’. It’s thought there will still be 15 bands in total – each with an upper limit ranging from £1,500 to £27,0001. However, frustratingly for employers, the UK Government has also just said it’s now seeking proposals on what these limits will be.
Several industry bodies (notably the CIPD and CBI) remain sceptical about the quality of apprenticeship training. However, the update provides some clarity on this. Here’s what we know:
The UK Government has announced a new Register of Apprenticeship Training Providers (RoATP) will be established – which will be operational by April 2017. Any training provider that wants to deliver apprenticeship-level training must apply (from October 2016), to be on this list. Each training provider must also re-apply every 12 months if they want to stay on the register. Both, argue the UK Government, will provide employers with the assurances they need that the training providers they use will be up to standard.
It’s been announced that levy-paying employers who wish to provide their own training (ie not through an approved training providers), will have to ‘meet the same quality criteria’, as training providers. However the UK Government says it will look to ensure meeting this criteria is ‘proportionate and appropriate’.
100% support for 16-18 year olds: Employers with less than 50 staff will have 100% of their training costs paid for by UK Government – as long as they take on apprentices between the ages of 16-18.
Extra support: Additional help, worth £2,000 per trainee will be available for employers that take on 16-18-year-old apprentices or young care leavers.
Employers who do not pay the apprenticeship levy will not have to use the digital apprenticeship service to pay for apprenticeship training until at least 2018.
Learn more about the levy and see some working examples in our The apprenticeship levy explained blog post.
And discover how Open University degree and higher apprenticeship programmes can help you make the most of your workforce talent.