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Apprenticeship levy: Companies have an 'opportunity to develop your workforce' as tax to fund apprentices comes into effect

By Chris Price

Companies with a paybill of more than £3 million will begin paying a tax to fund apprenticeships from today.

The apprenticeship levy is designed to encourage more firms to explore the possibility of hiring an apprentice.

Businesses affected will have to pay a 0.5% tax on their wage bill but can claim the money back if it is used to train present staff or new people starting apprenticeships.

Hospitality apprentices at work
Hospitality apprentices at work

“What is good about it is it encourages business to engage with apprenticeships,” said Tracy Searle, head of business development at East Kent College

“Many large businesses we have spoken to didn’t realise they could use the money to upskill their existing members of staff. They thought they had to take on new members.

“It’s a fantastic opportunity to offer a new qualification to a member of staff. When 0.5% of the paybill is taken they can draw down the money.”

The government hopes the levy will help it meet its target of getting three million people to start apprenticeships by the end of this parliament.

“Many large businesses we have spoken to didn’t realise they could use the money to upskill their existing members of staff..." - Tracy Searle, East Kent College

It comes as the KM Group runs its Kick Start Kent campaign aimed at making sure the apprenticeship levy works for employers and staff – and to raise awareness and improve completion rates.

The levy will only apply to an estimated 1.3% of employers, with the majority of companies set to receive grants and subsidies towards the cost of their training.

There is also a £1,000 incentive for employers that recruit 16-18 year olds.

Chris Homewood, employability development officer at Kent County Council, said: “The apprenticeship reform presents a great opportunity for many businesses.

Kent County Council employability development officer Chris Homewood
Kent County Council employability development officer Chris Homewood

“It’s an opportunity to develop your workforce to meet the needs of your business, and to develop skills training and staff development to suit.”

Catherine Daw, partner and head of employment at Maidstone law firm Brachers, said the levy will work for businesses if they plan ahead.

She said: “For businesses managing their people and talent strategies, it is always essential to plan for what’s coming.

“Whether it is taking advantage of the new apprenticeship scheme, developing an effective wellbeing strategy that will help promote a better workforce or taking account of key trends and upcoming changes, you need plan ahead.

Brachers partner and head of employment law Catherine Daw
Brachers partner and head of employment law Catherine Daw

“Getting the right advice can help you identify what you need to do and when, and ensure that you put effective measures in place.”

However, the levy has not been welcomed from all areas and has been described as a "blunt instrument".

Medway Council, which has 46 apprentices, will have to pay the tax.

Council leader Alan Jarrett said: “I don’t see how it would help the situation. The initial reaction was it is just another tax and we will have to see what we can get back from it.”

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