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How will the apprenticeship levy affect your business?

The apprenticeship reforms will impact businesses big and small.

How will the apprenticeship levy affect your business?

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With less than a week until the levy comes into action, many employers are still wondering how it will affect their business.

First confirmed in George Osbourne's 2015 Autumn statement, the apprenticeship levy will apply to all UK businesses with an annual wage bill over £3 million – around 2% of all UK employers. Those eligible will pay 0.5% of their pay bill into the online Digital Apprenticeship Service (DAS) which can then be used to fund apprenticeship training.

Non levy-paying employers will use the DAS to access training from 2018, but will co-invest 10% of the total cost of each training course.

The apprenticeship reforms will impact businesses big and small:

How to prepare for the apprenticeship reforms

What will I have to pay?

Large employers will pay 0.5% of their pay bill – minus an allowance of £15,000.

Big businesses will have to contribute large payments towards the levy – but it's not money lost! All funds will be available to spend on apprenticeships via the DAS – and topped up by 10% by the Government. It means you'll get out more than you put in – bringing huge opportunity to invest in the training you need to grow your business.

How will the levy affect my budget?

Your levy contribution will be automatically collected via PAYE each month and transferred to your DAS account, so you won't have to worry about budgeting for a major annual expense. Instead, you'll have to work out how you're going to spend your levy funds to benefit your business.

Make the levy work for you.

What about SMEs?

Most smaller companies won't be eligible to pay the levy. Instead they'll make a mandatory contribution of 10% to train each apprentice, and the Government will co-invest the remaining 90%.

How will it work?

When you've decided what training you require, the whole process is completed via your DAS account. There, you can search for apprenticeships, find accredited training providers via the RoATP, and pay for training from your digital account.

How will the levy affect training?

The levy is designed to bring a whole new level of freedom to apprenticeship training. Employers can use their funds to pay for any apprenticeship course – either for new recruits or existing members of staff – as long as the training meets an approved quality standard.

Employers can use their levy to train current workers on top of their current qualifications. It means businesses can fill their skills gap internally, while upskilling talented individuals.

What should employers do now?

The apprenticeship reforms are just around the corner. There's no point sticking your head in the sand thinking the reforms are just going to blow over.

Now's the time to act!

Download our free guide to find out how you can prepare for the apprenticeship levy – from building a training strategy to setting up your DAS account.

Download guide

This article includes research and opinion sourced by OneFile at the time of publication. Things may have changed since then,
so this research is to be used at the reader's discretion. OneFile is not liable for any action taken based on this research.