Leading industry trade bodies have sent a letter to the Government calling for urgent reform of the Apprenticeship Levy system.
So far, £3.5 billion of Levy funds have expired under the use-it-or-lose-it scheme, because businesses were unable to meet the requirements to draw on funds they have paid in, according to the trade groups.
This has prompted the call for urgent reform from the British Retail Consortium (BRC), UKHospitality, techUK, and the Recruitment & Employment Confederation (REC), who together represent industries employing over 10 million workers in the UK.
Their letter claims the scheme is holding back investment in critical training.
Investment in training
The Levy requires businesses to contribute hundreds of millions of pounds into a pot, but it only allows these funds to be spent in a restricted way.
For example, businesses cannot use the money to fund any courses that are shorter than one year in duration. As a result, £3.5 billion of potential investment into the UK labour market has gone to waste at a time when training is urgently needed.
What is the Levy?
· The Apprenticeship Levy is a tax paid by large businesses and used to fund apprenticeship training. The money sits in each business’s pot for 24 months, after which any unused funds expire and return to the Government.
· The Levy is paid by employers and then diverted into a fund to help pay for apprenticeship training costs.
· It applies to employers paying a wage bill of more than £3 million per year, who are required to pay 0.5 per cent of their payroll each month as a Levy tax, which can be offset by a £15,000 Government Apprenticeship Levy allowance.
What does the Apprenticeship Levy mean for SMEs?
Employers with a wage bill of less than £3 million are not subject to the Apprenticeship Levy. However, these organisations can access funding for up to 10 employees with the Government contributing 95 per cent towards the cost of apprenticeship training.
Need advice on the Apprenticeship Levy and how it affects your business? Contact us today.
