New regulations that came into force on 6 April mean that companies with a wage bill of over £3 million must pay an apprenticeship levy, set at 0.5 per cent of their total wage bill. The government hopes that this will raise £3 billion annually, helping to fund its target of three million new apprenticeships by 2020.
In return for paying the levy, employers will receive a yearly allowance of £15,000 to be spent on government-approved apprenticeship programmes. The levy is paid on a monthly basis through PAYE, and the allowance is portioned out every month. Any unused allowance payments can be carried forward.
Some have criticised the new measure, saying employers should be allowed to determine for themselves how their training budget should be used, and warning that it could emphasise quantity over quality.
CIPD skills adviser Elizabeth Crowley said: “Our research suggests that the apprenticeship levy in its current form may undermine efforts to improve the quality of apprenticeships and risks diverting spending from other valuable forms of training.”