By Jessica Houston – School of Marketing Ambassador
The apprenticeship levy could be the key to unlocking new marketing talent in your business.
We know that apprenticeships have evolved over the past few years with the introduction of industry standards and recognition by the employer and potential employees that an apprenticeship scheme is a fantastic alternative for those who feel studying for a degree isn’t right for them. What’s more, the quality of training offered as part of an apprenticeship scheme is top-class. Industry experts are designing marketing apprenticeship schemes to upskill and educate the workforce of tomorrow.
Thousands of UK employers realise the benefits of hiring an apprentice, but for those new to the concept or process, it can feel not very clear. So, what is the apprenticeship levy, and how does it work?
The apprenticeship levy is a UK tax introduced in 2017 for all employers with an annual pay bill of over £3million . These employers (currently only 2% of employers in the UK) contribute 0.5% of their total annual pay bill. The idea is to encourage businesses to take on apprentices and provide staff with more effective training.
All employers who pay into the levy can access their funds to contribute towards apprenticeship fees via the apprenticeship service. Organisations will have 24 months to use their funds on apprenticeship training of their choice. Any unspent levy funds support existing apprentices to complete their training and to pay for apprenticeship training for smaller employers. It is also worth noting that a levy-paying employer can choose to transfer a maximum of 25% of their levy funds to another employer, should they wish.
Small businesses who don’t currently pay into the apprenticeship levy can still access funds to support apprenticeship training, known as ‘co-investment’. This means that small businesses will share the cost of training with the government by contributing 5% of the training fees . The government will pay the rest (95%) up to the funding band maximum.
On top of the training costs, employers must also pay the apprentice at least the national minimum wage.
The government introduced the levy to help champion vocational skills by improving the quality and quantity of apprenticeships available. For those companies who are paying into the apprentice levy, in particular, it is an opportunity to maximise their return on investment by training up new apprentices and bringing needed professional skills into their organisation.
To help businesses offer new apprenticeships, Chancellor, Rishi Sunak, announced that any company that takes on an apprentice between August 2020 and January 2021, will get a bonus of £2000 if the apprentice is under 25 and £1,500 if they are 25 years old and over. This payment is in addition to the £1000 fee the government already pays for new apprentices aged 16-18 years old or 19 - 24-year-olds who have an education, health or care plan.
The government introduced this incentive to support employers who need to hire new skills into their business to recover from COVID-19 while creating more jobs for society. Ultimately, more apprenticeship opportunities will result in higher productivity growth for the country, which is particularly paramount today.
Find out more about hiring an apprentice with the School of Marketing.