The Apprentice Levy, what it means for SMEs

The apprenticeship levy is due to come into effect on 6 April 2017. It is a levy on UK employers to fund the costs of apprenticeship training.

One of the aims of the apprentice levy is to ensure SMEs have access to funding to hire and train apprentices, so that they can build a talented and skilled workforce for the future.

The Apprentice Levy

From 6 April 2017, employers with a paybill of more than £3 million will be subject to a levy of 0.5%. Through a digital account these employers will be able to access the apprentice levy fund, which they can use to pay for apprenticeship training and end-point assessment (the assessment of apprentices by an independent organisation, required before they can complete the apprenticeship).

SMEs

It is estimated that 98% of UK SMEs do not have a wage bill of £3 million, meaning most will be exempt from the levy. However, SMEs will still be able to receive government funding towards the costs of apprenticeship training and assessment through co-investment.

How it will work

• Employers will simply use the register available on the apprentice service to select each of the following:
• the training they want their apprentice to receive
• the approved trainer
• the assessment organisation

Assistance with this is available from the National Apprenticeship service. 

•  The Government will pay 90% of the price agreed with the training provider, up to the maximum allowed by the funding band for the relevant apprenticeship standard or framework. This is referred to as co-investment.

• Employers with less than 50 employees will not be required to contribute to the cost of the apprenticeship where the apprentice is:
• Aged 16 to 18
• Aged 19 to 24 and has previously been in care or has a local authority education, health, and care plan

• Additionally, the Government will pay a £1,000 grant to companies that take on a 16-18 year old apprentice.

• Businesses will also receive a grant of £1,000 when taking on apprentices who are aged between 19-24 and have previously been in care or have a Local Authority Education, Health and Care plan.

Overall, the new apprentice levy should provide a real opportunity for SMEs. By taking advantage of the funds available, SMEs have the prospect of significantly improving the skills and expertise of employees and ultimately their own competitiveness.  

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