N EWS E XTRA Apprenticeship funding changes: four months to go
The Apprenticeships’ Levy is due to come into force on 6 April 2017 throughout the UK. With four months’ to go, Brett Amphlett, BMF Policy & Public Affairs Manager, outlines the policy in England, highlights the main changes and explains the likely effects.
The BMF’s Brett Amphlett quizzes Phillip Hammond MP, Chancellor of the Exchequer on the Apprenticeship Levy
THE PROPOSALS The central idea is a legally- enforceable Apprenticeships’ Levy on employers. It will a wage bill of more than £3 million a year at a rate of 0.5% and will be collected via PAYE. Your payment will be calculated on total employee earnings subject to secondary Class 1 National Insurance Contributions (such as wages, bonuses, commissions & pensions). The Levy will not be charged on other in-kind. But you will have an allowance worth £15,000 each tax year to offset against payments.
Employers who operate multiple wage bills will only
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have one £15,000 allowance. The Apprenticeships’ Levy will be mandatory in all industries including construction in which there is already a statutory training levy. It will be payable irrespective of whether (or not) you have apprentices. Employers will calculate, declare and pay the Levy as part of normal monthly payroll transactions using the HMRC’s PAYE Real-Time Information system. It starts on 6 April 2017.
As an incentive, Employer’s National Insurance
contributions for apprentices aged under 25 years were abolished in April 2016. This applies to employers with existing apprentices
and those who take on You will be able to offset Levy payments for Corporation Tax.
FUNDING PROPOSALS For England, ministers are moving to a model based on 15 new funding bands with an upper limit ranging from £1,500 to £27,000. All Frameworks and Standards will go into one of the bands. The upper limit of each band will cap the maximum amount an employer can spend on each apprentice. This limit will also cap the maximum price that government will ‘co-invest’ (see separate paragraph). If employers want to spend
more, using their own money, they can.
From April 2017, all
Frameworks will be put into a band based on current rates of taxpayer support. Thereafter, it is down to employers and providers to negotiate and agree prices. But the BMF encounters a common belief outside Whitehall that rates and caps are set much lower than the actual cost of training done at present. This is a disincentive to train - and to train in quality.
TRAINING PRICES The assumption being made that employers, providers & assessors will negotiate and agree prices is not
November 2016 BMJ
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