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Businesses Not Maximising Apprenticeship Levy

A worrying article published today in FE Week shows that barely half of the eligible employers are on the apprenticeship levy system. It is worrying, as only 10,500 of the eligible 19,150 businesses have signed up to use their apprenticeship service account. This means that nearly half of all apprenticeship levy-paying businesses will likely lose their money without implementing any form of training.

Who is paying the Apprenticeship Levy?

By now, all businesses with a payroll of more than £3m will pay the levy. The apprenticeship levy is calculated at 0.5% of the annual payroll. As an example, if your payroll is:

  • £5m per year, you will be paying £10,000

  • £10m per year, you will be paying £35,000

  • £20m per year, you will be paying £85,000

On top of what businesses pay into the levy, the government also adds an additional 10%. This means that many businesses have a large pot of money available to spend on training, but, as the report suggests, many are just not accessing their accounts.

The apprenticeship levy is paid through PAYE to HMRC. Businesses then need to register an apprenticeship service account and seek guidance on how to use this money for training.

What can the Apprenticeship Levy be used for?

Your levy money can be used for anyone that you employ. This can be a new start, an existing staff member and, more recently, graduates that you either take on or are already in the business. Your apprenticeship levy does not need to be used exclusively for new apprentice starts, as it can also be used to upskill existing members of staff. Clearly, there is still a drive from the government to recruit new and young talent into businesses, and we encourage this.

The levy money can be used on any apprenticeship programme. We talk to many businesses, and one of the main reactions we always get is that they do not think they can put older employees through an apprenticeship – well, they can. An apprenticeship is a programme of learning and training that, in many cases, businesses are already paying for as part of their CPD activities.

We just don’t understand what the levy can be used for

We understand. Funding, frameworks, standards, diplomas, eligibility, apprentice service accounts………….there is a lot to take in. But advice is at hand. Please contact our advisors at Capella Systems. We offer a managed service to businesses looking to maximise their apprenticeship levy opportunities. Our only word of warning is that there is a timescale for using levy funds. Any unused funds after 24 months will disappear from businesses apprenticeship service accounts. Our advice….use it or lose it!

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