Apprenticeship reforms – The Facts
The government has set a challenging target of recruiting 3 million Apprentices by the year 2020. Reforms to Apprenticeships continue to grow momentum and we are now seeing the introduction of a new range of Apprenticeship Standards which will replace the Apprenticeship Frameworks currently available. Current frameworks will be phased out as Apprentices move across to the new standards.
In 2017 the newly formed Institute for Apprenticeships will come into power, which will oversee the implantation of reforms and drive Apprenticeship standards. April 2017 will also see the introduction of the Apprenticeships levy, which will support this initiative and forms a key part of wider initiatives to increase business participation in Apprenticeships.
Businesses whose annual payroll costs exceed £3million will be required to contribute 0.5% of their payroll. Levy monies will help fund the recruitment of enthusiastic young people into the UK workforce as well as support the skills development of your existing employees.
Small businesses will continue to receive Apprenticeship funding via a new digital voucher system, and will continue to make a percentage contribution towards the cost of Apprenticeships. The new digital apprenticeship service will allow employers to pay for their training via digital voucher.
Myerscough College can help you minimise the risk and maximise the benefits of this levy.
Apprenticeship ‘Trailblazer’ Standards
The guiding principles behind the reforms are:
- Employer-led Apprenticeship standards that truly meet the needs of industry
- A simpler system of funding administered by employers
- Employer ownership of provider choice
The key benefits to employers of the reforms:
- Apprenticeship content is business specific and tailored to business needs
- Ownership of funding and buying power for training
- Access to higher and degree level Apprenticeships
Myerscough College are currently involved in the design and implementation of a number of new ‘Trailblazer’ Apprenticeship standards and further announcements will be made once ready for delivery.
The Apprenticeship levy
- The Apprenticeship levy will come into effect in April 2017.
- Employers whose payroll exceeds £3 million will pay 0.5% contribution via PAYE
- All employers will receive an allowance of £15,000 to offset against payment of the levy. This effectively means that the levy will only be payable on paybill in excess of £3 million per year.
- The levy will be payable through Pay As You Earn (PAYE) and will be payable alongside income tax and National Insurance.
- Each employer will receive one allowance to offset against their levy payment. There will be a connected person’s rule, similar the Employment Allowance connected person’s rule, so employers who operate multiple payrolls will only be able to claim one allowance.
- The levy will apply to employers across all sectors.
- Paybill will be calculated based on total employee earnings; it will not include other payments such as benefits in kind. It will apply to total employee earnings in respect of all employees.
- Legislation to permit the imposition and collection of the apprenticeship levy will be introduced in the Finance Bill 2016.
If you have an annual pay bill less than £3 million you will continue to have access to Government funding via the new Digital Apprenticeship Service which will be launched towards the end of 2016, early 2017.
Employer of 250 employees, each with a gross salary of £20,000: Paybill: 250 x £20,000 = £5,000,000 Levy sum: 0.5% x £5,000,000 = £25,000 Allowance: £25,000 - £15,000 = £10,000 annual levy payment
Employer of 100 employees, each with a gross salary of £20,000 would pay: Paybill: 100 x £20,000 = £2,000,000 Levy sum: 0.5% x £2,000,000 = £10,000 Allowance: £10,000 - £15,000 = £0 annual levy payment
To discuss any aspect of Apprenticeships, funding reforms or for general advice on training please contact Employer Services on 01995 642255 or email email@example.com
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by Dave Salmon