What does the Apprenticeship Levy mean for Small to Medium businesses?

From 1st May 2017, Apprenticeships funding will change with the introduction of the new ‘Levy’. The change will affect large employers and businesses with a wage bill of £3m or more across the private and public sector. These organisations will be required to pay a tax via HMRC which will fund apprenticeship training.

The purpose of the levy is to encourage employers to invest in apprenticeship programmes, and to raise additional funds to improve the quality and quantity of apprenticeships.

Organisations will be set-up with their own digital account, administered through the new Digital Apprenticeship Service (DAS) and self-manage to select approved providers to manage their levy fund.

How about smaller businesses?

The arrival of the digital apprenticeship service is notable to businesses of all sizes as it will effectively drive the future of apprenticeship frameworks and standards, which training providers and assessment organisations businesses work with, and post apprenticeship vacancies. Furthermore, by 2020, all employers will be able to use the digital apprenticeship service to pay for the training and assessment for apprenticeships.

It is also predicted by the Government that unused levy payments will be used to fund apprenticeships training for small to medium businesses. With an estimated £2.5bn due to be raised by the levy, it is expected this will stretch to cover all employers with apprentices, regardless of their size, due to the number of employers expected to not utilise their levy accounts.

What about funding changes?

As the levy is introduced in May, there will also be a new funding system in place for businesses that run apprenticeship programmes. The objective of the new system is to increase a business’s buying power and control over apprenticeship training.

Business will be able to choose their apprenticeships and training provider for delivery – and a big change is that the cost is negotiable.

The arrival of the levy is definitely raising the profile of apprenticeships amongst all businesses, and this likely to have an impact on small businesses that are considering apprenticeships programmes in the future and a businesses training options.

If you need to talk to someone about your businesses training options, talk to us


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