How the Apprenticeship Levy affects your business

The apprentice levy went into effect April 2017 with the intention of helping ease labour shortages and building skills for untrained workers. After a year of the levy, it seems that it is not working as intended. The levy has not increased apprenticeships and has actually hindered some businesses from hiring due to the difficult process of getting reimbursed from the levy after hiring apprentices.

The levy is .5% of the annual pay bill each year for companies with £3 million or more in payroll costs. In the past year, over £1.39 billion has been paid into the apprentice levy, yet only £108 million has been drawn out. Many industries that would be helped by the levy, including manufacturing and engineering, have struggled to manage the requirements of the levy, and have found their apprenticeships are more expensive than what the levy program allows. In highly technical fields, apprentices are paid more than the maximum reimbursement allowed by the levy.

Despite the issues with the current levy system, most companies are in favour of the apprentice levy if changes are made to improve the programme. Some changes being discussed are removing the 24-month time limit to draw funds and increasing incentives for industries that have the largest skill shortages. With some changes, the apprentice levy will help the economy and be a useful tool for businesses to hire and train apprentices.

If you are paying the apprentice levy, but having difficulty managing the reimbursement, we can help. Contact us today to find out more about how to increase efficiency, reduce errors, and save money.