This document discusses how businesses can prepare for the upcoming Apprenticeship Levy in the UK. It explains that the levy will be introduced in April 2017 to fund 3 million new apprenticeships by 2020. It advises businesses to determine if they are above or below the £3 million payroll threshold to understand if they will pay the levy. It also recommends that businesses calculate potential levy costs, update payroll systems, identify skills gaps where apprentices could help address weaknesses, and register for the Digital Apprenticeship Service launching in January 2017.

1. How can your business
prepare for the
Apprenticeship Levy?

2. In a drive to train 3 million new apprentices by
2020, April 2017 will see the government
introduce a new tax on businesses.
The Apprenticeship Levy is designed to tackle
the skills gap, giving employers the chance to
invest in the future of their business and the
future of our young people.
3 million
By
2020

3. However, the levy is proving controversial
because it will shift much of the funding
of apprentices from the government to
employers.
I think that the apprenticeship levy will
have a lot to offer UK businesses, giving
them the chance to invest in their own
business through their employees.

4. Whatever you think, the apprenticeship levy is
coming, so it’s probably time to consider how
your business can prepare…
Here are 4 things I think your business should
consider to prepare for the apprenticeship levy
to make sure the transition is simple and
effective.

5. Figure out where you stand.
This first step is straight forward – you must
figure out whether your business is exempt
from the levy or not. This is relatively
simple to figure out. The levy applies to all
employers whose payroll is over £3 million.

6. If your payroll does not reach £3 million, you
will not be expected to pay into the levy, but
you will be asked to pay 10% of the cost of
training an apprentice.

7. If you have connected businesses, or
businesses that are part of a group, each
organisation’s paybills will be aggregated for
the £3 million threshold test.
However, each organisation will be able to
draw down funds for training if they have
separate PAYE references.

8. Getting ‘up to date’ can mean a few
different things.
Spend time getting
“up to date”.

9. Firstly, make sure you’re up to
date with how the levy will work
and what it means for your
business.

10. Levy-paying employers will be able to register
for the Digital Apprenticeship Service from
January 2017.
This means you will have a couple of months
to get up to date and familiarize yourself
with the system and how your payments will
be managed.

11. You should consider updating your
organisation’s payroll software to make sure
you take into account the new rule of
exempting organisations from Class 1 National
Insurance Contributions for Apprentices under
the age of 25.

12. Do the maths.
As a levy-paying business, you should take
this time to calculate what payments you’ll
be making.

13. Remember to include the salary costs of
apprentices in order to get a clear idea of the net
cost to the business.
The minimum wage is £3.30 for apprentices aged
16-18 and those 19 years or older during the first
year of the apprenticeship. Afterwards, the
standard National Minimal Wage applies.
Also, remember to consider any additional costs
associated with managing and developing
apprentices!

14. Know your weaknesses –
and improve them.
The Apprenticeship Levy will offer businesses
an invaluable opportunity to invest in the
areas that need improving.

15. Rather than launching apprenticeships all
across your business, I recommend that
employers should take a step back and
evaluate how hiring an apprentice could fit
into an existing area of your company and
add value there.

16. Consider choosing an area that is
facing a skills gap – training an
apprentice to have the right skills is a
cost-effective way of ensuring your
business has the necessary skills.

17. It may also be a good idea for employers
to consider areas where their current
staffing may benefit from further
training.
In many cases, some employees can be
trained via the apprenticeship
programme, saving your business the
time and effort you would put in to
recruiting a new candidate.

18. How is your business preparing for the
apprenticeship levy? What else would
you add to the list?
@SafarazAli
Safaraz Ali