The apprenticeship levy is just around the corner and will come into full effect on the 1st April. If your company has a PAYE bill of £3 million or more, you will be affected. Your company will be subject to a compulsory tax equivalent to 0.5% of your PAYE bill. The money can only be reclaimed, to use on apprenticeships. If your company doesn’t typically take on apprentices however, this may all seem a bit frustrating. Even for those companies that do – the apprenticeship levy may mean that you will need to train many more to fully recover the tax you’ve paid. But the apprenticeship levy isn’t quite what it seems. Contrary to what many people think, your company doesn’t have to take on hundreds of new, unskilled young people to be able to claim back the money it pays out on the levy. In fact, your company doesn’t have to take on anyone new whatsoever. So to give you a more accurate picture of what the apprenticeship levy means for your company, we thought we’d highlight some of the more popular beliefs about the levy that are completely untrue.
Myth 1: Your apprentice needs to be between 16 and 25
Although most apprentices are between the ages of 19 and 24, the apprenticeship levy training fund does not restrict the use of funds for apprentices of this age. In fact, the money can be used for anyone who is over the age of 16 with no upper age limit.
Myth 2: Apprenticeships are only for new starters
Again – not true. Your apprenticeship levy fund can be used to put your existing employees through an apprenticeship. You should think of the apprenticeship levy as a ring-fenced L&D budget, which can be used, not only to train new employees, but upskill your existing workforce. Apprenticeships exist in all kinds of subjects from IT to Marketing and Leadership.
Myth 3: Your apprentice must be at the bottom of the career ladder
Of course you can use your apprenticeship levy training fund to train young, new, unskilled workers. However, the fund could also be used to move existing employees further “up the ladder”. This means an established employee, with years of experience and qualifications in their field, can still use the training fund to gain further qualifications, becoming more technically qualified or ready to move into a management / leadership position.
Myth 4: Apprenticeships are expensive
The reality is, if you’re a large company you will have to pay a compulsory tax equivalent to 0.5% of your PAYE bill. You can either do nothing with it, or you can use it as an additional L&D budget to upskill your workforce. An apprenticeship is a comprehensive, long term training programme and you’re right – they don’t come cheap. But you will have already paid for it through the levy and so no additional payment is required. What’s more, the government will provide a 10% bonus on all funds that are applied to your apprenticeship service account. That means, for every £1 deposit into the account, you will have £1.10 to spend on training making an apprenticeship better value than you think.
Myth 5: Apprentices are lower quality employees than university graduates
An apprentice can be anyone from any background with any skillset or qualification. Frequently, apprentices are those who have had a change in career and are looking for training in a new field. They may not be recent graduates, but underwent further education several years ago. Don’t forget, apprentices can also be your current employees, so this statement is definitely not applicable (unless you’re deliberately employing “low quality” people). Current staff will already know your company’s practices and will be a much more effective employee than a new university graduate.
So there you go – 5 myths busted about the new apprenticeship levy and we guarantee there’s plenty more misconceptions out there. To make sure you’ve got the full picture about the new apprenticeship levy and to have all your questions answered, contact us today on 020 3651 4747 or fill in the contact form on our website and we’ll be in touch.