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Ten things you need to know now about the apprenticeship levy

Posted on from Open University

What is the apprenticeship levy and how it will affect your business?

1. What and when?

The apprenticeship levy on UK employers, to fund new apprenticeships, comes into force on 6 April 2017. It will be charged at 0.5% of businesses’ annual pay bill. Every employer will be granted a ‘levy allowance’ of £15,000 per year to offset against their levy payment, meaning that funds will be paid only by employers with a payroll of more than £3m. 

2. Why apprenticeships?

Higher-level skills are seen as a solution to the UK’s productivity issues. Apprenticeships give employers an active role in developing the skills they need.

3. Smaller businesses

The government has said it will cover 90% of apprenticeship costs for businesses that don’t pay the levy.

4. The levy fund

You can access apprenticeships funding through a new digital apprenticeship service account, after declaring the levy to HMRC.

5. Act now

You will be able to register for your account from January 2017. This gives you time to familiarise yourself with the service. You could even pilot a smaller cohort of apprentices, making sure you have processes in place ready for the levy. 

6. Quality providers

When spending your apprenticeship levy, you will be required to choose a government-approved training provider from the Register of Apprenticeship Training Providers (RoATP), accessible to all employers through their digital apprenticeship service. This ensures your chosen provider delivers high-quality apprenticeships.

7. Standards designed by you

One of the aims of the levy is to improve the quality of apprenticeships. More than 1,300 employers have so far been involved in designing standards, as part of trailblazer groups. This is to ensure that all apprenticeships reflect the needs of businesses.

8. Degree apprenticeships

Demand for skills is predominantly at the higher skills levels. Apprentices can earn a degree that is directly related to their job and gain the transferable skills, knowledge and behaviours employers want, which is why the option of degree apprenticeships is important for most businesses. 

9. Work-based programmes

Candidates will look for courses specifically designed as apprenticeships, rather than just degrees with work experience thrown in; the true benefit of an apprenticeship is that it contextualises training to your business environment. Work-based learning also allows apprentices to fit study around their job so you won’t lose staff from the workplace at crucial times when developing sought-after skills.

10. No age limits

Levy funds can be directed towards your largest area of skills need – from new entrants to senior leaders. There are no age limits for apprenticeships, giving the flexibility to develop programmes which upskill staff across the organisation. 

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