Fat Cats Giving Back
Posted on: 30 Sep, 16
Larger businesses will pay small businesses for their apprentices under the Government’s New Levy.
Miss O, I was looking at that chart about London having more people with degrees than any other major city (which is pretty amazing)… but not everyone gets the opportunity to go to University…
Yes, and given there is more drinking than learning sometimes, perhaps this isn’t a bad thing?
…and not every job needs someone with a degree to do it… so, how do younger people learn the skills needed to get a foot in the door? And, more importantly, how do businesses offer job opportunities to younger people?
There’s lots of different ways to gain skills these days, there’s colleges, night classes and even YouTube- but, in my humble opinion, one of the best has to be apprenticeships.
I thought apprenticeships were only for people looking to learn a trade like becoming a plumber? What about those wanting to work in IT Helpdesks, Compliance, Sale and Administration roles or even tech start-up companies ?
Yes, back in the day the UK had a great skill base in trades, and getting an apprenticeship (who would pay you to be on one!?) was hugely important to UK business and trade.
What happened Oury?
Somehow this got lost as we moved to a service based economy – but thankfully someone in the government has remembered how good they were… and for some years now, any business can offer apprenticeships and get government support for hiring young talent.
But, aren’t businesses reluctant to hire apprentices because of the costs to train them?
I think it’s probably more that companies aren’t used to doing it as well, but now with the government’s apprenticeship levy coming into play in 2017, businesses would be stupid not to hire an apprentice.
Why’s that Oury?
Because Big Business is going to be funding the costs to small and medium businesses! Finally, the fat cats are giving back… (-;
What? Really? How?
The compulsory apprenticeship levy will be applied to all companies with a pay bill of more than £3 million each year. This needs to be paid irrespective of whether the company employs apprentices or not. Funds gained from this levy then will be used to fund new apprenticeships, in all companies small and large.
Oh yeah, I was reading about this the other day. The levy is designed to help deliver new apprenticeships and the government is hoping that up to 3 million new apprenticeships will be funded through the levy. It means that big companies will be able to invest in their own apprentices, but their contributions will also go towards funding apprentices for small and medium sized businesses. Oury, do you know how the scheme is going to be administered?
Yep, businesses will pay the levy to HMRC through the PAYE process. The levy will be calculated at 0.5% of a business’ annual pay bill where it exceeds £3 million. Those businesses that want to use the levy to fund apprenticeships will then able to “claim back” apprenticeship training cost and any apprenticeship levy payment made to HMRC will be allowable for Corporation Tax.
That’s a great, but given that around 98% of businesses in England have an annual pay bill of less than £3 million, how do they benefit?
Well, unlike other “taxes” imposed by the government, the apprenticeship levy will be ring fenced purely to support apprentices. Businesses that don’t have to pay the levy will have around 90% of the cost of training apprentices paid for by the government and there will be extra incentives for employers that take on 16 – 18 year old apprentices or young people who have been in care. This will be funded through the levy.
Wow, this sounds like a really equitable scheme with its principles rooted in social justice. (Fist Pump) If you think about it as well, if we invest more in training our local workforce now, it will mean we will be less reliant on recruiting migrant workers to fill the skills gaps and this has the potential to soften the blow of Brexit if there ends up being some restrictions on the free movement of people.
Yeah… it all sounds good – ultimately the next problem… is keeping the talent…
Key Points
- Open your mind to the idea of hiring apprentices when looking at attracting new talent to your business.
- It’s not just for plumbers anymore, almost all businesses can benefit from hiring apprentices.
- Lower cost of wages, and likely less entrenched attitudes or culture.
- New Govt Levy on larger businesses will fund 90% of training costs of the apprentices if you’re a small business.
- Likely to be become a more and more important way of training and retaining skilled workers.
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