Figures suggest firms are not making the most of apprenticeship vouchers

27 November, 2017

Almost half of businesses paying the apprenticeship levy are writing their payments off as tax, according to new figures – amid concerns that firms are not reaping the advantages of extra training.

The Department for Education (DfE) revealed that just 10,500 eligible businesses are registered to receive apprenticeship vouchers, compared with the 19,150 paying the levy – with more than 200 of those operating in the legal sector.

The levy is designed to fund the Government’s pledge to create three million apprenticeships by 2020. Employers with a wage bill of £3 million or more each year are required to pay the levy – charged at 0.5 per cent of their annual pay bill.

All organisations have an apprenticeship levy allowance of £15,000 each year, meaning they only pay the levy on any amount over £3 million.

Joe Dromey, senior research fellow at the Institute for Public Policy Research, told the HR publication People Management that the low uptake suggested employers were not engaging with the levy as hoped.

“While these are early days, with the levy introduced just six months ago, these figures will be a cause for concern,” he said.

“They seem to validate concerns raised around the lack of awareness of the levy – even among firms paying it – and that many levy-paying employers will simply see it as a tax and write it off.”

Elizabeth Crowley, skills adviser at the CIPD, added: “In our view the Government needs to be doing more work to ensure employers are making a choice in not using the levy, instead of being unaware of it.

“It is equally important that if there is an underspend, the funds are ring-fenced and used for supporting employer training, as there is a danger it could simply go back into the Government’s coffer, and not be used to increase skills training and investment in the UK economy.”

A separate study, published by the British Chambers of Commerce earlier this month, found that one in four firms had no understanding of how the levy worked or how their company would respond.

At Watson Buckle, our payroll specialists are experienced in advising businesses on a range of tax and financial matters, including the apprenticeship levy. For more information, please contact us.

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