‘Complex’ levy affects apprenticeships

Small businesses that don't pay the apprenticeship levy will have a key role to play in ensuring apprenticeship targets are met, a business group has claimed.

The Department for Education revealed the number of apprenticeships in the 3 months to the end of July 2017 fell by 59%, compared to the same time the previous year.

With many firms in the dark over the perceived "complex" nature of the apprenticeship levy, its effect on the drop is not solely to blame.

Businesses with an annual wage bill of more than £3 million must pay the levy towards apprenticeship funding. The levy is charged at 0.5% of the annual wage bill.

Each employer receives an allowance of £15,000 to offset against their levy payment, with the aim of increasing the number of apprenticeships.

Mike Cherry, chairman at the Federation of Small Businesses, said:

"Getting more people doing apprenticeships is critical, especially if we are to tackle the skills shortage biting many small firms.

"98% of firms don't pay the levy, and these small businesses will be essential to the government reaching its target of 3 million apprenticeships by 2020.

"While many small firms are committed to apprenticeships, many are still overwhelmed by the complexities in the system."

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