Apprentices to be Top Source of Talent in 2018

Are you making use of apprentices to grow your business? 37 per cent of businesses say apprentices will be their top source of talent this year according to a poll of more than 2,000 senior HR professionals.

The poll, conducted by Alexander Mann Solutions, followed the introduction of the Apprenticeship Levy in April 2017. The levy was designed to boost the number of young people going into vocational training.

Previous research by the same organisation revealed that 71 per cent of senior HR leaders are of the opinion that the Apprenticeship Levy will create a new route into the workplace and that it will effectively supplement or even rival the intake of graduates.

Sandrine Miller, head of emerging talent consulting at Alexander Mann Solutions, says, “As these findings suggest, leaders are certainly reassessing where they source fresh talent. And while graduates remain the preferred choice for the highest percentage of businesses, there are signs that the tide is shifting.”

University Applications Down, Apprenticeships Up?

Miller also comments that UCAS has reported that university applications have declined by 4 per cent. “While there will always be demand for graduate-level talent, HR Leaders are increasingly considering the benefits of developing talent in house, where the role allows, as part of a wider total workforce strategy,” she says.

Reports would suggest that new apprenticeship starts have actually reduced by as much as 59 per cent since the Apprenticeship Levy came into force. Miller however believes that this is most likely due to the way businesses are reassessing long-term requirements, taking the time they need to plan and implement new programmes. In other words she says, “It’s the calm before the storm.”

The Apprenticeship Levy

The Apprenticeship Levy came into force on 1 April 2017, replacing all taxpayer funding for apprenticeships for companies of all sizes. 0.5 per cent of an employer’s wage bill goes towards the levy, although there is an offset allowance of £15,000 equating to 0.5 per cent of a £3 million wage bill. This means that all employers with a wage bill greater than £3 million will be subject to the levy.

If you are unsure as to how apprentices could benefit your business or need advice on how the Apprenticeship Levy works, why not seek advice from your local bookkeepers?

The Apprenticeship Levy Explained

Later on this year, large organisations will be subject an Apprenticeship Levy as the government changes legislation surrounding apprenticeships. Although it will mainly be large employers that are affected by the levy, there may well be some effect on small businesses too.

So what do you need to know? Here we explain what the apprenticeship levy is, when it comes into effect and who will be affected by it.

What is the Apprenticeship Levy?

The Apprenticeship Levy is a charge payable to HMRC via PAYE returns which will be applied to large employers in both the public and private sectors. Once the new legislation comes into force, employers that pay into the levy can also use it to fund apprentice training within their businesses.

The idea behind the levy is that it will encourage employers to invest in apprenticeship schemes, as well as raise additional funds to help improve the quality and quantity of apprenticeships.

Who will be Subject to the Levy?

The threshold for the levy will depend on the size of a business’ payroll. Those businesses with a wage bill of over £3 million will be required to pay the charge. Therefore, as the levy will only apply to 2% of all employers, only larger SMEs will be affected.

If a company is over the payroll threshold, it will have to pay 0.5% of its payroll into the levy. With that, every employer will receive an allowance of £15,000 to offset against what they owe. This is why the levy is only being charged to those companies with a payroll larger than £3 million, as it means the £15,000 allowance could potentially offset the entire amount owed.

When does the Apprenticeship Levy come into force?

The levy comes into effect on 1^st April 2017, and is payable via PAYE. There has been a mixed response from businesses towards the levy. Some are worried that larger businesses will have to fund extra apprenticeships over their £15,000 allowance themselves. Others are welcoming the levy as a way to improve the quality of apprenticeship schemes.

If you’re worried about the effect of the apprenticeship levy on your business, why not take some advice from professionals? Your local bookkeepers will be able to help you navigate through the new legislation.