Businesses are finally beginning to understand the apprenticeship levy, after previously voicing serious concerns over its complexity and lack of flexibility.
The apprenticeship levy took effect on 6 April 2017 and means businesses with an annual pay bill of more than £3 million must pay the levy towards apprenticeship funding.
It is charged at 0.5% of an employer’s annual pay bill, and each employer receives an allowance of £15,000 to offset against their levy payment.
Business groups, including the Institute of Directors (IoD), urged the Government to address ongoing problems with the levy – and it attempted to do so by announcing a package of reforms in Budget 2018.
Levy-paying businesses can transfer up to 10% of their training funds to other employers in their supply chain in 2018/19, and this will increase to 25% from April 2019.
Research from the IoD shows that since Budget 2018, 51% of 1,141 employers “perfectly” understand the levy – compared to just 36% in March 2018.
Stephen Martin, director-general of the IoD, said:
“These figures suggest that the creases are being ironed out [with the apprenticeship levy].
“Greater opportunity to transfer levy funds is a step in the right direction, and ensuring smaller enterprises are in a position to take advantage of this come April must now be the focus.”
However, 60% of business leaders surveyed were unaware of the changes revealed by Chancellor Philip Hammond.
In addition, 10% of employers did not understand how to reclaim funding and 4% did not know how to pay the apprenticeship levy.
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