Use it or lose it: why the Apprenticeship Levy matters

Here, Angela Middleton, chairman of MiddletonMurray, explains why the Apprenticeship Levy matters for small businesses.

The Apprenticeship Levy was introduced over three months ago (on 6th April 2017), but many businesses are yet to use it to their advantage. This may be due to general confusion over how to practically apply the levy, as well as a lack of understanding of what the Levy entails.

The levy is effectively a tax on all UK employers which supports the funding of apprenticeships. It was introduced at a rate of 0.5 per cent of total PAYE (Pay As You Earn) tax to all businesses with an annual payroll bill of over £3 million. It is payable alongside Income Tax and National Insurance and employers can claim this back to fund apprenticeship training. An added bonus is that the government tops up each business’s apprenticeship fund with an extra ten per cent every month.

Individual employer’s funding is made available to them via a new digital account, through which employers can pay for training for apprentices via a recognised training provider, such as MiddletonMurray. If businesses fail to claim these funds, they will lose them.

It’s very important for businesses to use their funds sooner rather than later as the funding expires after 24 months. From the moment the money is deposited into an employer’s fund, it is only there for two years. It’s therefore imperative that businesses formulate their Apprenticeship Levy plan as soon as possible – if you do not use it, you will lose it!

If organisations are properly informed about the benefits of the Apprenticeship Levy, they will be more enthused about using their levy funding in the most effective way for their business. There has been an increase in positivity surrounding apprenticeships and the introduction of the levy is increasingly being seen as a logical next step. Employers tend to accept and understand this.

Some employers are more cautious than others, but this is often because they are keen to use the funds they accrue to their full advantage. In my experience, employers simply want to use the levy fund in the most advantageous way for their business. This will vary from organisation to organisation and there is no one-size-fits-all approach. Look at your business and the way it operates and see how apprentices can add to the development and growth of the company.

When a business takes on one apprentice, it’s rare that they will be unwilling to take on more. The Apprenticeship Levy provides effective support for doing this and it will make life easier for businesses in the long term.

For many, there will also be a portion of the levy fund which will be used for the training of existing members of staff. The prime reason for the Apprenticeship Levy being introduced is to create new apprenticeships, but this does not mean that the training that is offered to existing staff is not beneficial. These members of staff are already in a secure job, but it is very important that businesses continue to invest in them.

Additionally, sometimes it won’t be possible for companies to use their whole Apprenticeship Levy fund on new apprentices. For instance, in the case of many large local authorities they would have to take on thousands of new apprentices every year to utilise the funds available to them, which would not be feasible.

When focusing on the Apprenticeship Levy or any other governmental changes to your business, it’s important to be pragmatic. Not every business in the country will be willing to embrace change right away but, in my experience, there is not the intense resistance to the Levy that was previously suggested. By ensuring that employers have all the facts and access to proper consultancy services which will help them to make informed decisions on how to use their funds, there is no reason for the Levy to be anything other than a great success.

Angela Middleton is chairman of MiddletonMurray

Further reading on the Apprenticeship Levy

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

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