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Are you Levy-ready?

Did you know that the way apprenticeships are funded is changing? From April 2017 a new Apprenticeship Levy will be introduced for all private and public sector employers? Maybe you’ve already heard something about the new Apprenticeship levy, but don’t fully understand what it’s for or appreciate how it will work in practice? Well, hopefully this short Transport Training Academy guide about the new Apprenticeship Levy will fill in some of the gaps and bring you up to speed.

What is the Apprenticeship Levy, why is it being introduced and what is its purpose?

The Apprenticeship Levy was announced in 2015 by former Chancellor, George Osborne. The Apprenticeship Levy will be introduced in April 2017 in order to fund 3 new ‘high quality’ apprenticeships by 2020. It is being introduced because there is a recognised shortage of skilled staff in many areas in the country.

The Apprenticeship Levy applies to all private and public sector employers in the UK and will be payable through PAYE. Employers with a wage bill of more than £3 million, however, will have to pay a 0.5 per cent levy to fund apprenticeships. All employers will receive a £15,000 allowance to offset the payment of the levy.

The scheme has been criticised, with some calling it an additional tax on business; however, its principle aim is to encourage employers to take on more apprentices, or retrain existing staff to increase skills and improve their career prospects

What do organisations get in return, and how will employers be able to spend the money?

Once employers have declared the levy to HMRC, they will be issued with a digital voucher which allows them to purchase training from a recognised provider using the new digital apprenticeship service account. Through the new online apprenticeship service, employers will be able to:

  • select an apprenticeship framework or standard.  
  • choose the training provider or providers you want to deliver the training
  • choose the organisation that will assess your apprentices
  • post apprenticeship vacancies

If you are an employer who pays the levy, you can also use the apprenticeship service to:

  • set the price you’ve agreed with your training provider
  • pay for apprenticeship training and assessment  

What should your business be doing in preparation?

The short answer to that is that you should be planning now so you can make the most out of what promises to be a real opportunity. If you are able to get the ball rolling before the Levy starts later this year, you could benefit from the current funding available and pay very little for the training of your apprentices.

If you have any questions or concerns about the new Apprenticeship Levy, please feel free to call TTA on 0845 056 0561. We’re always happy to help.

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