UK businesses ‘in the dark’ about how to make best use of Apprenticeship Levy

confidence amongst businesses

A survey carried out by the British Chambers of Commerce (BCC) has suggested that UK businesses are ‘in the dark’ over how to make best use of the Apprenticeship Levy.

The Apprenticeship Levy was introduced on 6 April 2017, and has changed the way in which apprenticeships are funded: larger employers are required to invest a percentage of their annual pay bill in apprenticeships. The Levy is 0.5% of the pay bill, but there is an annual allowance of £15,000. It is reported and paid using the Pay as You Earn (PAYE) process.

The BCC surveyed over 1,400 businesses and found that 23% of firms currently paying the Levy have no understanding of the system.

Meanwhile, 56% of businesses do not expect to recover any or only a portion of their payment, whilst 36% expect to recover all or more of their payment.

The BCC stated that businesses are ‘uncertain about how to use the funds to find and train the skills they need’. It has called for ‘clearer guidance and support’ for businesses seeking to make use of the Levy.

Commenting on the issue, Jane Gratton, Head of Business Environment and Skills at the BCC, said: ‘For many businesses who pay the Apprenticeship Levy, it can feel like an additional employment tax, much of which they are unable to recover, and one that is deflecting training budgets away from other important training needs.

‘Firms need greater flexibility on how they can use their Levy monies and a system that is fully operational as quickly as possible, is simple and efficient, and that enables them to access good quality training.’