Calls to simplify the Apprenticeship Levy

04 September 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) has called for a more flexible Apprenticeship Levy to benefit school leavers.


The Institute says that UK SMEs are in danger of missing out on young talent if the levy is not reformed.


The government introduced the apprenticeship levy in 2017 to help fund the development and delivery of apprenticeships, with the aim of improving the quality and quantity of those available.

Employers with a paybill of more than £3 million are required to pay the levy which is calculated at 0.5% of the employer’s paybill. All employers get a £15,000 allowance to offset against the amount they have to pay. Companies with a lesser pay bill do not have to pay the levy but can still claim apprentice funding.


According to ICAEW, the benefits for non-levy paying employers are particularly enticing, with the government committing to paying 95% of its apprenticeship training costs, but the complexities in accessing the funds are putting SMEs off applying.


Iain Wright, director for business and industrial strategy, 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.”


A recent report from the Association of Employment and Learning Providers found that nearly one in four (24%) apprenticeship training providers had to turn away a prospective SME employer of apprentices over a lack of funding.


Can apprenticeships bring about greater diversity?  Read more from ICAEW.