Autumn Statement

Autumn Statement 2015 comment: Apprenticeship Levy

Apprenticeship Levy raises more questions than it answers

Jonathan Riley, Head of Tax, Grant Thornton UK LLP:

"The Autumn Statement provided some clarification on the new Apprenticeship Levy but still raises more questions than it answers. The Levy has potential to invest in vital future skills but risks creating additional bureaucracy for MSBs.

"The rate was set at 0.5% of payroll which was roughly in line with expectations. In the consultation the government indicated that the Levy would only impact large employers but did not define what constituted large. In today’s Statement the Chancellor announced that the Levy will apply to all employers, but with an allowance of £15,000 – this means that organisations with payrolls of more than £3million will have to pay. All businesses will be able to claim back funding for apprenticeships, whether or not they have paid the Levy – so in effect this does create a redistribution of investment from larger and mid-sized to small businesses

“Although there is positive intent behind the Levy, the actual impact could be akin to “a tax on jobs" and adds yet another layer of complexity to corporate compliance and reporting. Some specific sectors will be awaiting the detail with baited breath, including: care and education agency worker providers.

"The Levy is due to be introduced in April 2017. Further consultation with business is needed and the detail needs to be refined. Businesses need time to prepare rather than a rushed introduction. Crucially, given the long term nature of this proposal, business will want to see cross-party support for the arrangements."

“Future increases in the minimum wage and salary growth will see more businesses pay the Levy than first anticipated, with businesses that have a significant workforce disproportionately affected. To ensure successful investment in the future of the economy apprentices need to be of high quality and adaptable to the changing needs of business. The new Trailblazer apprenticeships being led by employers will help to ensure that apprenticeships are fit for the economy of today and of the future.

“We hope to see flexibility in apprenticeships, including apprenticeships being available to graduates and those looking to retrain, to ensure we do not overlook the vital contribution these people make to our economy."