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BIS releases apprenticeship levy information

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The Department for Business, Innovation & Skills (BIS) has clarified some aspects of the apprenticeship levy

UK employers, in any sector, with a pay bill of more than £3 million each year will need to pay the levy (due to be introduced April 2017). They will be charged at a rate of 0.5% of their annual pay bill, and will have a levy allowance of £15,000 per year to offset against the rate that must be paid.

Businesses will pay the levy to HM Revenue and Customs (HMRC) through the Pay as You Earn (PAYE) process.

The new information also defined exactly what will count as an apprentice. The main criteria are:

  • The apprentice must be employed in a real job; they may be an existing employee or a new hire
  • The apprentice must work towards achieving an approved apprenticeship standard or apprenticeship framework
  • The apprenticeship training must last at least 12 months
  • The apprentice must spend at least 20% of their time on off-the-job training

In the English Apprenticeships: Our 2020 Vision report the government states that by 2020 it hopes that the design and delivery of high-quality apprenticeships will be overseen by a new, independent and respected quality body – the Institute for Apprenticeships. Further information on the levy is scheduled to be released in June.

Petra Wilton, the Chartered Management Institute (CMI)’s director of strategy and external affairs, said that as employers have less than 12 months to put their plans in place this concise guide to levy announcements to date is welcome.

“The guide sets out a clear timetable, and employers need to act now to take full advantage of available skills funding,” she said. “Apprenticeships are a highly cost-effective route for workforce training but will require new relationships and a fresh approach.

“Degree apprenticeships have only just arrived but have already established themselves as a key tool for improving management capability and maximising workforce potential. Smart business leaders that recognise the power of a professionally trained workforce are already setting up programmes to benefit from the current funding regime.”