The levy will be introduced in April 2017 and it will be set at 0.5% of an employers paybill and will be collected via PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. The levy will only be paid on any paybill in excess of £3 million.
The paybill threshold will include seasonal and temporary workers.
The NFU is concerned that some businesses, particularly in the Horticulture sector, will pay the levy based purely on their seasonal labour cost, and pay a vastly disproportionate amount of levy compared to their ability to employ apprentices year round or longer for a formal apprenticeship scheme in agriculture. The NFU has responded to consultations from BIS and HMRC on the apprenticeship levy, raising this concern. We have also written to senior officials within BIS to outline our views on the apprenticeship levy and have submitted a formal response to the House of Commons sub-committee on education, skills and the economy inquiry on apprenticeships. Our response included concerns about how the levy will operate, and how payments will be collected as well as the inclusion of seasonal and temporary workers in any levy collection.
Those businesses with a salary bill of less than £3m will not pay the levy. From April 2017, those who don’t reach this threshold will still need to make a contribution to the cost of training the apprentice and Government will pay the rest, up to the maximum amount of funding available for that apprentice under an approach termed ‘co-investment’. The Government has also announced that a new body will be established to oversee the levy and apprenticeship standards in England. The Institute for Apprenticeships will be fully operational by 2017.
More information on apprenticeship funding is due to be published by Government in the summer and October 2016.
An NFU member only briefing is available here, which provides more information on the levy, how it will work and activity the NFU has undertaken on behalf of its members on apprenticeship funding.