The New Apprenticeship Levy And The Charity Sector
This April, the government introduced the Apprenticeship Levy, which affects all organisations with a playbill over £3 million. It is important to note that the charity sector will not be exempt. This means that if a charitable or not-for-profit organisation does indeed pay out over 3 million, then they will be expected to pay the levy. Furthermore, charitable organisations are required to use the money towards recruitment and training of apprentices.
What is the apprenticeship levy?
Essentially, the apprenticeship levy will be a levy on UK employers, paying out over a certain amount, to fund apprenticeships in the future. The aim here is to collect investment from large employers which can be used directly to fund and maintain apprenticeships. The levy will apply to all organisations, whether they are in the private, public or charity sector, but only to about 3% of total employers who happen to have large payrolls.
Who’s liable to pay?
All employers are liable to contribute, though the levy will only be charged to those with payrolls over £3 million, with a larger threshold for those paying out £6 million or more. The money must then be placed in a secure account specially for funding apprenticeships. The government will then provide £15,000 to offset the cost. Any remaining funds after 18 months will expire, then being made available for other organisations to fund their own schemes. (Phew, I think I made that as simple as possible!)
How does it work? How much are we expected to pay?
- The employer will be required to pay 0.5% of their pay bill toward the levy.
- The money can then only be used for apprenticeship training and assessment.
- All apprentices must meet government-set apprenticeships standards
- There are no special caveats or loopholes for charities
- Organisations who do not have a large enough pay bill, will have 100% of their apprenticeships training costs covered by the government. (For 16-18-year-olds)
How will it affect charities?
Charities and not for profit organisations will be impacted by the levy in much the same way corporate companies are. There are no exemptions or exclusions currently in place which stop the levy from applying to the charity sector. Some have concerns over charities funding private sector apprentices, but this has not yet impacted the legislation. The Charity Finance group have written more extensively about this. While larger charities which fall among the 2% of liable organisations will be required to comply with the scheme, a vast majority of charities will not be expected to contribute due to the small size of their payroll. In fact, smaller charities may be eligible for the following support.
- The government will contribute towards training and assessment.
- If you have under 50 employees, they will be 100% of training costs for 16-18 years old.
- Grants of up to £1500 are available for apprentices ages 16-24
Further information on the apprenticeship levy and charity sector