One in four businesses unaware of apprenticeship levy benefits

Around a quarter of apprenticeship levy-paying businesses still do not know how the new tax works, according to research.

The British Chambers of Commerce, which published the report in conjunction with Middlesex University, said one in four firms had no understanding of how it worked or how their company would respond.

The levy is designed to fund the Government’s pledge to create three million apprenticeships by 2020.

Employers with a wage bill of £3 million or more each year are required to pay the levy – charged at 0.5 per cent of their annual pay bill.

All companies have an apprenticeship levy allowance of £15,000 each year, meaning you only pay the levy on any amount over £3 million.

Companies which contribute towards the fund can reclaim Government vouchers for apprenticeships. Smaller companies can still claim apprentice funding.

But over half (56 per cent) of levy-paying businesses do not expect to recover much of their payment, while just 36 per cent believe they will recover all or more of it.

BCC businesses environment and skills head Jane Gratton said the Government must ensure that the levy did not impact on businesses’ ability to fund training in other areas.

“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,” she said.

Federation of Small Businesses chairman Mike Cherry also voiced his concern that the apprenticeship levy was not inclusive of small businesses.

“It’s critical that information on apprenticeship funding reaches small businesses if we are to increase social mobility and meet the government’s ambitious apprenticeships target,” he added.