Chancellor announces change to apprenticeship levy

01 October 2018

At the Conservative Party Conference Philip Hammond announced that large employers will be able to transfer up to 25% of their apprenticeship levy funds to businesses in their supply chain from April next year.

The Chancellor is reported to have said:

“We have heard the concerns about how the apprenticeship levy is working, so today we’ve set out a series of measures to allow firms more flexibility in how the levy is spent. But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs. So, in addition to these new flexibilities, we will engage with business on our plans for the long-term operation of the levy, working hand-in-hand with employers to ensure that every young person can fulfil their potential and achieve their dreams.”


Increased flexibility was announced earlier in the year in that if an employer who pays the apprenticeship levy does not plan to use all of the funds in their apprenticeship service account, they can make a transfer to another employer to support them in taking on apprentices. Transfers are the first big flexibility HMRC is offering to employers to help make apprenticeships work better for everyone.


CIPP comment

The levy system has received criticism that it is too complex for smaller businesses to navigate, and not flexible enough as it cannot be used to pay trainees’ travel and accommodation costs. Some companies have labelled the levy as a tax and with the amount of red tape it involves, many businesses just write off the cost, negating the real purpose of the levy. 

It will be interesting to see just what is published by the government after the Conservative Party Conference as to the detail within the supposed ‘review’. We shall watch developments closely and keep you informed.