The measure announced was the apprenticeship levy, a new payment that large employers will have to make from April 2017 to help fund the cost of apprenticeships.
The levy will be charged at 0.5% of the company's pay bill for companies with annual pay bills of more than £3 million.
Is the apprenticeship levy just another tax on business, or can businesses actually benefit?
Calculating your levy payments
Take your annual pay bill and multiply it by 0.5%.
Every employer receives a levy allowance of £15,000, so subtract that figure from your result.
If your annual pay bill is less than £3 million, you won't have to pay the levy.
If your pay bill is above £3 million, from April 2017 you must pay your share via PAYE.
For example, if your company pays staff £4 million annually.
£4 million x 0.5% = £20,000
£20,000 - £15,000 (allowance) = £5,000 annual levy payment
Do employers receive anything in return?
Yes – the government will create a new online portal to manage apprenticeships. Your contributions will be converted into digital vouchers (with a 10% top-up from the government), which you can use to pay apprenticeship training providers. You can't use the funds to pay for apprentices' wages.
What about employers with pay bills under £3 million?
These employers still receive the £15,000 allowance, which they can use to pay training providers, but won't have to use the new digital service until 2018. The government will set funding caps of different types of training. If the employer can't negotiate a cost under the funding cap, they'll have to make up the difference.
It is also expected that employers who don't pay the levy will still have to contribute towards the cost of training, alongside the government's share. This is called co-investment.
Does the levy also apply to companies in Scotland, Wales and Northern Ireland?
The levy will apply in the same way, but these regions will decide how to use the funds. If your pay bill is spread across England and another region of the UK, the percentage of the funds you receive as digital vouchers will be directly proportional to the pay bill of the employees living in England.
What about apprenticeship training that the employer carries out?
Employers can't use the vouchers for anything other than training schemes carried out by approved training providers on the new apprenticeship portal.
Overall, 98-99% of firms in the construction industry won't need to pay the apprenticeship levy. For these firms, it's worth reading up on the new system in time for 2018, when all employers will have to use it to receive government funding for apprenticeship training.
Visit Gov.uk for more details on the levy.
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