IMI James Stockdale discusses Apprenticeship Levy

The introduction of a new levy on all large UK employers to fund apprenticeships will underpin the government’s apprenticeship reform programme to increase the number of apprenticeships by 35% to 3 million starts in the life of this Parliament, and with the levy raising around £3billion to underpin costs.

The Government estimates that the levy will be paid by less than 2% of UK employers who will receive a £15,000 allowance to offset the payment of the levy, which will be paid in vouchers. The legislation will be introduced in the Finance Bill 2016, and the apprenticeship levy will be payable through Pay As You Earn (PAYE) systems, alongside income tax and National Insurance.

James Stockdale, Head of Policy and Standards at The IMI, commented:
“From April 2017 all businesses paying over £3 million per annum on salaries are going to see the additional tax being taken out to be put into this levy.”

“Intended to provide the funding and incentives to help deliver the Government’s commitment to apprenticeships, the levy is, in essence, a tax that will be applied to all employers in the UK. That money will be put into a separate account and will be made available to that employer for them to invest into apprenticeship programmes – the amount contributed will then be ‘topped up’ by the Government at a ratio of £2 for every £1.  If employers don’t draw down that funding within specific timescales, still yet to be defined, then it is likely that the money will be released for other employers of all sizes to use.”

Following a three year study commissioned by the IMI, apprentices were found to generate an ROI between 150% and 300%, as well as reducing long-term recruitment and training costs.

To find out more about the apprenticeship levy, please click here.