AS2015: Apprenticeship levy set at 0.5%

Three million apprenticeships will be funded by 2020 through the levy on all businesses with more than £3m payroll costs, prompting mixed responses from industry.

Jane Parry, managing partner of PM+M Chartered Accountants, based in Blackburn, said: “Apprenticeships have been central to the government’s agenda for years and the announcement that 3 million will be created by 2020 has got to be welcomed as has increased funding and a new business led body to set standards. However, the new 0.5% levy on all businesses with £3m+ payroll costs is a stealth tax that makes the system even more complicated. Just like Auto Enrolment, it’s putting the burden on employers. The one surprise was that there was no mention of IR35 as that’s been in consultation for a while.”

The Government said in the paper accompanying George Osborne’s speech to the House of Commons: “The apprenticeship levy on larger employers announced in the Summer Budget will be introduced in April 2017. It will be set at a rate of 0.5% of an employer’s paybill. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any paybill in excess of £3m and that less than 2% of UK employers will pay it. The levy will be paid through Pay As You Earn. By 2019-20, the levy will raise £3bn in the UK.”

Brian Berry, chief executive of the Federation of Master Builders, said: “George ‘the Builder’ will need a new generation of real builders to make his vision for housing a reality. We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable. Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. That’s why we’re keen for the Government to tread carefully when applying the new proposed Apprenticeship Levy to the construction industry.”