After previously voicing serious concerns over its complexity and lack of flexibility, UK businesses are finally beginning to understand the apprenticeship levy. 

The new scheme came into effect on the 6 April 2017 but companies struggled to adopt it thanks to its complex nature. It meant that businesses with an annual pay bill of more than £3 million must pay the levy towards apprenticeship funding.

This is charged at 0.5% of an employer’s annual pay bill, and each employer receives an allowance of £15,000 to offset against their levy payment.

After facing ongoing problems with the levy, business groups, including the Institute of Directors (IoD), urged the Government to address this – and it did. A package of reforms was announced in the 2018 Budget which could be why companies are finally getting to grips with it.

Levy-paying businesses can now transfer up to 10% of their training funds to other employers in their supply chain in 2018/19. This will increase to 25% from April 2019.

Research from the IoD shows that since the Budget 2018, 51% of 1,141 employers “perfectly” understand the levy – compared to just 36% in March 2018.

Stephen Martin, director-general of the IoD, commented:

“These figures suggest that the creases are being ironed out [with the apprenticeship levy]. Greater opportunity to transfer levy funds is a step in the right direction and ensuring smaller enterprises are in a position to take advantage of this come April must now be the focus.”

While adoption of the apprenticeship levy is certainly improving, 60% of business leaders surveyed were however unaware of the changes revealed by Chancellor Philip Hammond last year. In addition, 10% of employers did not understand how to reclaim funding and 4% did not know how to pay the apprenticeship levy.


Do I get funding for taking on an apprentice?

To find out everything you need to know about taking on an apprentice and whether or not you qualify for funding, please visit the website.


Talk to us

If you would like to know more about the apprenticeship levy and how it affects your business, please don’t hesitate to get in touch with our director, Steve Greehy who will be more than happy to discuss our accountancy services with you.

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