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Apprenticeship reforms, how will they affect your business?

July 19, 2017 featured image

Apprenticeships in England are changing, with the Apprenticeship Levy and simplified funding processes introduced in May 2017. Here’s our overview of the main changes and how they might affect businesses considering taking on an apprentice.

Apprenticeship Levy

The Apprenticeship Levy will be paid by employers with a payroll of over £3 million. This came into force in April and is intended to help the government double its investment in apprenticeships to £2.5bn. The levy only affects apprentices who started training after 1 May 2017.

The levy amounts to 0.5% of a company’s payroll, with every employer getting an allowance of £15,000 to offset against the money they owe. So, if your business has a payroll of £3,000,000, your 0.5% levy would be £15,000, cancelled out by the government’s contribution. For businesses with a payroll of £6,000,000, the 0.5% levy amount would be £30,000, minus the government’s £15,000, leaving £15,000 payable.

This money is then put into an online digital apprenticeship service account where it can be used to pay for training and assessment; saving account for training if you like. Any money that goes into this account gets a 10% top up from the government. Money that isn’t used will go back into general apprenticeship investment, with plans to allow levy-paying employers to choose where this goes, by transferring funds to other employers or apprenticeship training agencies. The option to share funds in this way is set to be introduced next April.

Sole traders and SMEs

The vast majority of employers and Logic4training customers will not be affected by the Levy as it is aimed at bigger businesses.

For employers with fewer than 50 staff, the government will provide 100% funding towards training 16 to 18-year-old apprentices, as well as 19 – 24-year-olds who have previously been in care or who have a Local Authority Education, Health and Care Plan. Employers with over 50 staff, will pay 10% of the training cost, with the government paying the remaining 90% – described as ‘co-investment’.

Simplified Funding

From May, the way apprenticeships are funded in England has been simplified to make it easier for employers. Funding has moved away from the old provider-led model, meaning providers will have to be more responsive to what employers need.

Historically, funding has been at different rates, depending on the age of the learner. The new funding scheme means that each apprenticeship pathway has a single funding band, based on the current adult rate, regardless of learner age.

The government has recognised, however, that there are increased costs attached to training younger apprentices so, in addition to the price that the employer and provider agree for training 16-18-year-olds, there will be an additional one off payment of £1,000 and extra funds equivalent to 20% of the maximum funding band for that framework. The uplift will also apply to 19-24-year-olds who were formerly in care or who have an Education and Health Care plan.

Get Involved

Apprenticeships can be a great way to expand your business and train up potential stars of the future. For more information about the changes, click here.

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