In April 2017 the Government introduced a levy tax for employers whose wage bill exceeds £3 million per year. This consequence is that employers have to pay equivalent to 0.5% of their payroll bill into the Apprenticeship Levy fund on a monthly basis, with The Government then offering a 10% top up on funds. The Apprenticeship Levy allows employers to then reinvest in their teams by way of apprenticeship training.
The thinking behind the implementation of the Apprenticeship Levy was to increase apprenticeship investment and incentivise employers to offer apprenticeships for new employees and to upskill existing employees. With a 4.2% year-on-year increase in the participation in apprenticeships seen up to March 2020, the growing demand for employers to offer apprenticeships is clear.
There is a rolling 24-month deadline to spend levy funds on apprenticeship training, after which the funding is returned to the Treasury.
The Department of Education has said that the amount of unspent levy has grown in the pandemic, as the demand for apprenticeships was lower than expected, the levy scheme has however remained unchanged. If you are a levy paying employer your funds will be held in a Digital Apprenticeship Service (DAS) account you can access your funds via an online portal The Direct Apprenticeships Service
The account allows the business to access funding, find apprenticeships, find, save, and manage training providers, recruit apprentices, and manage any apprenticeships they are currently running.
Why should I draw down my Apprenticeship Levy funding?
Firstly, this is money that the company has had to pay into a levy fund to use for the purpose of training via apprenticeships. As explained above, if it is unused it will go to the Treasury and the company loses the opportunity to ‘spend’ it.
It is important to remember that the levy money can be used both for introducing new talent and resource into a business but also and importantly to upskill members of the current workforce.
According to apprenticeships.gov.uk:
“Hiring an apprentice is a productive and effective way to grow talent and develop a motivated, skilled and qualified workforce.
• 86% of employers said apprenticeships helped them develop skills relevant to their organisation
• 78% of employers said apprenticeships helped them improve productivity
• 74% of employers said apprenticeships helped them improve the quality of their product or service”
To find out more about the Apprenticeship Levy contact us here or pick up the phone and speak to a member of our Apprenticeship team on 03332005153