As of 6 April 2017 all businesses that have an annual wage bill exceeding £3million will be required to contribute towards the training of apprentices.
The Apprenticeship Levy is basically a payroll tax, the key points you need to be aware of are:
- Only UK companies with an annual wage bill over £3million will be liable
- Liable companies will have to contribute 0.5% of their annual wage bill, which will be payable monthly through PAYE
- All employers will receive a £15,000 allowance
- All eligible employers will be able to draw down from the levy fund and pay for apprenticeship training and assessment through the digital apprenticeship service
All employers need to be aware of the Apprenticeship Levy so that they can begin implementing planning strategies, and this is especially true for staffing companies.
On average, payrolls run by recruitment agencies are higher than those run by other businesses, which means even small staffing companies are at risk of paying a hefty tax, especially those that are involved in the temporary staffing market and those that run multiple payrolls.
At this point there is not a lot that can be done, some agencies have considered taking temporary workers on as apprentices, but with the criteria this can be tricky and not a sustainable solution.
More lobbying will be done as it is expected that recruitment companies will be hit the hardest. For now, the most important thing is that you are aware of the changes. We also advise that you carry out an audit of your payroll to see whether you will be required to pay the levy and if so how much. From this you will be able to ensure you will have the financial means to pay the levy and if not, begin to put planning processes in place. Planning in advance will help to mitigate the impact of the levy when it is introduced, it also allows you to see if any changes can be made to your contracts or operating model to reduce your liability.
For more information about the Apprenticeship Levy – how it will work, what impact it will have on those that do not pay the levy and how the digital apprenticeship service will work – see our article: The Apprenticeship Levy 2017: Everyone is affected.
For more advice or help planning for the levy, please contact Lee Manning at firstname.lastname@example.org.
Further consultation is to be released in October 2016 and December 2016. To find out more Information, please go to Gov.uk.