From April 2017 large employers will be required to pay the apprenticeship, and it is important that schools, as employers, understands how this affects them, and are prepared for this additional cost and opportunity to engage in the apprenticeship programme.
The apprenticeship levy is payable at 0.5% of payroll, but only for those employers with a pay bill of £3 million per year. If an employer has a pay bill at this level, they will also receive a £15,000 allowance to offset against this cost. For example, for an employer with a pay bill of £3,500,000, the apprenticeship levy at 0.5% will be £17,500. However, after taking into consideration £15,000 allowance, the actual levy payable will be £2,500.
The outcomes for different types of schools are likely to vary, but the onus is on the employer to ensure that they comply with the levy requirements on this, so each school must ensure it has assessed itself for its liability to pay the levy. As we understand it, here is the way that the apprenticeship levy will affect the following types of schools:
- Community schools: where schools are maintained by the Local Authority, the Local Authority is the employer and will be responsible for paying the apprenticeship levy. The Local Authority will also get the £15,000 allowance;
- Standalone academies: the governing body of an academy is the employer. The academy will therefore be liable to pay the apprenticeship levy based on its pay bill, and will also be in receipt of the £15,000 allowance, which it can offset against the levy;
- Academies that are part of multi-academy trusts (MATs): the MAT, as the employer of staff in its academies, will be responsible for paying the apprenticeship levy. The MAT will get one £15,000 allowance to offset against its levy liability;
- Foundation schools: as with academies, it is the governing bodies of foundation schools that are the employers of staff. They will be liable to pay the levy and also get the £15,000 allowance.
The apprenticeship levy will be collected by HMRC and paid into a new digital account. These digital funds can be accessed by levy payers to fund the training and assessment of apprentices – the idea being that employer paying into the scheme can get back what they put in. These funds must be used within 24 months of the levy being paid however, so it is important that schools that are levy payers are prepared to take on apprentices as soon as possible after it is implemented in April 2017 so they do not lose these funds. Various additional support is available, for example to employers taking on apprentices aged between 16-18 years, and the details of this will be covered in a future blog post.
The levy is one element of the government’s reforms to increase the number of apprenticeships to 3 million by 2020. ATL’s position on what good quality apprenticeships should look like can be found here. We also be publishing a blog post on the new plans for teacher apprenticeships before the end of November – watch this space.