From 6th April 2017, all businesses with a wage bill of more than £3 million were required to pay the apprenticeship levy, charged at a rate of 0.5 per cent of their annual bill. So what impact does this have on smaller employers who fall under the £3 million bracket?
What is the Apprenticeship Levy?
The Apprenticeship Levy is a UK tax on employers which can be used to fund apprenticeship training. This presents great opportunities for employers to grow and develop their workforce. This levy payment is placed in a designated account (Direct Apprenticeship Service) which can then be accessed by that employer to fund apprenticeships via an approved apprenticeship training provider.
For SMEs with a wage bill of less than £3 million p.a. can still access government funding without paying any levy. In practical terms, this means they will contribute just 5 per cent of the cost of training an apprentice, and the government will ‘co-invest’ by paying the remaining 95 per cent (under the current proposal). Businesses with under 50 employees won’t pay anything if they employ apprentices under the age of 19, and will receive a £1,000 payment with an additional £1,000 payment to the training provider.
The government’s new online service will help employers to select an apprenticeship framework, choose training providers and assessment organisations, and post their apprenticeship vacancies.
There are further benefits to apprenticeship training for small businesses too and there are still misconceptions around apprenticeships that are preventing businesses from using this as a valuable route to training.
You don’t need to ‘recruit’ a new apprentice
SMEs don’t need to recruit a new apprentice into their business to take advantage of the government’s funding. They can use it as a cost effective way to train or upskill existing staff and provide new skills and knowledge to a workforce which you know and trust.
Flexibility around your business
Apprenticeship training can be delivered around your business. Learners will need to dedicate 20% of their time to training (off-the-job) but this can take place at your premises and be done online, or the tutor will visit your offices for face-to-face training. This means that your apprentices can be continually applying their new learnt skills to the job where you can monitor their progress and assign them new tasks that will allow them to apply their knowledge.
Allows you to retain key staff
Retaining your most valued staff is a real challenge for many SMEs and staff turnover is an expensive issue to deal with. Apprenticeship training gives businesses options; either to train your staff for specific roles or give them further training and an industry standard qualification in a role that they are already doing, such as customer services or business administration. Training employees and giving them career growth opportunities is one surefire way to show them that their company is invested in their future. It will motivate them to keep working for your business and be better at their jobs. These opportunities are mutually beneficial since these training opportunities help grow the company while at the same time they further employee knowledge and skills.
According to a report published by the CIPD, 66% of employers experienced improved staff morale, while 70% saw an improvement in their product or service offering by bringing in apprentices. Small business should be encouraged to consider apprenticeship training as a valuable and cost effective route to staff retention and industry-recognised training.
NTG Training has been delivering high quality apprenticeship training to businesses for over a decade, offering a wide range of apprenticeship standards, from digital marketing and business administration through to leadership and customer service training. Based in Chester, we serve businesses throughout the Midlands and the North West to upskill their workforce and source new talent.