Posted by Lizzie ● 25 April 2016

A Guide to Apprenticeships and the Levy

Apprenticeships are a hot topic for employers at the moment, especially with the government pushing its target of 3 million apprenticeships by 2020.

To help cut through the noise and media, we've created a dummies guide to apprenticeships to keep you up to date on the latest news.

So, what is an apprenticeship?

There are government 'rules' on what an apprenticeship is:

  • 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

What is the levy?

Essentially the levy is a tax that all employers who offer apprenticeships in the UK will have to pay to HM Revenue and Customs. The levy will be charged at a rate of 0.5% of employer's annual pay bill and the good news is that you'll have a levy allowance of £15,000 per year to offset against the levy. Employers will only need to pay the levy if their total amount of earnings exceeds £3 million in a given year.

How will the levy impact employers in the future?

On April 21st, the government announced that changes are on the horizon. From April 2017 the way the government funds apprenticeships in England will be updated, with some employers will be required to contribute to a new apprenticeship levy. There will also be changes to the funding for apprenticeship training for all employers.

It's a complicated playing field so we'd love to know how it affects you?

More information can be found on the government's 2020 vision here.

Topics: Industry Insights