· Features

Hot topic: The apprenticeship levy

Employers with a pay bill of more than £3 million each year will be required to invest in apprenticeships

But are businesses prepared for the levy? And what should they be doing now if not?

David Browne, employment law partner at Shakespeare Martineau, says:

"Our experience is that employers remain relatively uninformed about the apprenticeship levy and are not prepared for it coming into force in April 2017.

"The levy (of 0.5% of the employer’s annual pay bill) will apply to all employers with pay bills of more than £3 million, irrespective of whether they actually use apprentices or not. It is therefore compulsory, and HMRC has already put anti-avoidance provisions in place, so ignorance isn’t an option. For levy payers who use apprentices there will be an electronic account to access and administer the money, although if the money is not used within 24 months it is lost.

"Employers need to check whether or not the new provisions are likely to apply to them. This may not be straightforward. For example, council schools that come under the overall local authority wage bill may well be caught. Employers to whom the levy applies should be budgeting for it and any that do not currently use apprentices should consider introducing them to claw back the levy payments."

Sue Evans, head of HR and OD at Warwickshire County Council, says:

"The public sector fully recognises the value of apprenticeships, with many local authorities running excellent programmes in spite of recent punishing budget reductions. We are preparing for the levy by taking time to understand how the process will work. There is a digital marketplace through which we can access funding for apprenticeships but details of this have only recently been made available.

"The Treasury is still working on the mechanics – although it has already honed the mechanism by which our levy will be paid to them!

"In Warwickshire we have invested significantly in our apprenticeship scheme and also support local businesses in developing high-quality apprenticeships. We are ready and waiting for the green light to access levy funding. Those starting out will need to put in new processes for recruiting and training apprentices. It has taken a couple of years for us to get to this position so our advice would be to get started as soon as possible."