ICAEW calls for government to simplify Apprenticeship Levy

28 Aug 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged the government to simplify the Apprenticeship Levy.

The Apprenticeship Levy took effect from 6 April 2017, and 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. In principle, employers will only pay the Levy if their annual pay bill is over £3 million. The Levy is reported and paid using the Pay as You Earn (PAYE) process.

According to the Institute, UK small and medium-sized enterprises (SMEs) are 'in danger of missing out on young talent' if the Levy is not reformed. It has called for a 'more flexible' Levy to be created in order to 'benefit school leavers'.

Commenting on the matter, Iain Wright, Director for Business and Industrial Strategy at the ICAEW, said: 'In our interactions with businesses up and down the country, we find SMEs more and more reluctant to run their own apprenticeship schemes due to the complexity of accessing Levy funds and the lack of flexibility built into the scheme.

'The SME sector has traditionally been a big recruiter of 16-18 year-olds for apprenticeships, so this is a concerning development which could mean that talented young people are unable to access the skills and training they need to prosper in the workplace.'