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Gemma Cawthray Associate, Veale Wasbrough Vizards The government has published its response to 'The future of apprenticeships in England: funding reform technical consultation' and provided further details on the apprenticeship levy, how it will be calculated, and how the arrangements for apprenticeships will be funded in England.
We previously reported on the government's proposal to introduce a levy to fund the training of apprentices. On 25 November 2015, the government published its response to the consultation and George Osborne made a statement about the apprenticeships levy as part of the Autumn Statement. The government has proposed a significant increase in expenditure to apprenticeships by 2020. The levy will come into effect in April 2017.
The levy will be 0.5% of an employer's paybill and collected by HMRC through PAYE. The paybill will be the combined total of employees' gross earnings, not including benefits in kind. The levy will only be paid by employers whose paybill exceeds £3 million per year. The levy will apply to all employers in the UK. The levy will be used to create a fund from which employers will receive an annual allowance of £15,000.
Employers in England will be able to access funding through the Digital Apprenticeships system. It is proposed that the funding of apprenticeships can be used across a supply chain, for example, to an outsourcer contracted by the employer. However, if an employer does not use its allocated funding within 2 years, it will expire and become available to another employer.
Apprenticeships are a devolved matter in Scotland, Wales and Northern Ireland. Although all employers in the UK will have to pay the levy, the government is liaising with the devolved administrations over the arrangements for giving employers access to funding.
Legislation will be introduced in the Finance Bill 2016 to implement the scheme.
Given the £3 million threshold, it is predicted that the levy will only be paid by fewer than 2% of employers. However, the levy will be used to enable all employers to fund apprenticeship schemes. The government's proposal is part of a wider aim to increase the employment of young people.