What is an apprenticeship?
Apprenticeships benefit employers and individuals, and by boosting the skills of the workforce they help to improve economic productivity. An apprenticeship is a real job with training. It is a way for individuals to earn while they learn gaining valuable skills and knowledge in a specific job role. Apprenticeships are available in 1,500 occupations across 170 industries. Businesses of all sizes and sectors in England can recruit an apprentice and they can last anything from 12 months to 4 years.
What are the benefits of hiring apprentices?
Apprenticeships provide an effective way for employers to attract young talent and upskill existing staff. A survey undertaken by the National Apprenticeship Service found that 83% of employers that recruited apprentices would recommend apprenticeships to other businesses. Benefits include:
- Increase in productivity – The average apprenticeship completer increases business productivity by £214 per week.
- Increasing employee satisfaction – Not only to the apprentices themselves but also to those that work with apprentices.
- Reducing staff turnover – Investing in apprentices leads to higher levels of staff loyalty. A survey undertaken by the Skills Funding Agency in 2015 showed that more than half of employers indicated that apprentices stay in their business longer than other recruits.
- Reduction in recruitment costs – 75% of employers that have employed apprentices have reported that apprenticeships have reduced their recruitment costs.
- Reduction in levy payments – Investment in apprenticeship training leads to a lower tax bill for those businesses that are required to pay the apprenticeship levy, see levy payers section below.
How does funding for apprenticeships work?
From 6th April 2017 a new levy was introduced by Government that requires some employers to make a monthly levy payment in order to fund the apprenticeship system. The key elements of the scheme are provided below:
- Each employer is required to pay a monthly levy payment through HMRC’s Pay As You Earn system equal to 0.5% of their payroll costs – the total amount of employee earnings subject to class 1 NICs.
- Each employer receives a £15,000 yearly levy allowance to offset against their levy bill.
- Therefore only employers with annual payroll costs of £3m or more are required to make levy payments.
- Any apprenticeship training or assessment costs can be offset against the levy payment due.
- The payments are administrated through a digital account. The account allows employers to use their credits to pay only training providers and assessors involved with apprenticeships.
- The Government top-up any funds paid in to an employer’s digital account by 10%, meaning more funding is available to pay out for apprenticeship training than is put in.
To view an apprenticeship step-by-step guide for levy payers please click here.
Employers with payroll costs of less than £3m a year only need to pay 10% of less of total apprenticeship training and assessment costs. The other 90% or more is paid for by the Government.
Employers with fewer than 50 employees will have 100% of their apprenticeship training and assessment costs paid by the Government for:
- apprentices aged 16-18 or;
- apprentices aged 19-24 that were formerly in care or with a local authority education, health and care plan.
- The Government will pay both employers of all sizes and training providers £1,000 for apprentices aged 16-18 year and 19-24 (formerly in care).
- Employers are not required to pay National Insurance Contributions for apprentices under the age of 25 on earnings below the higher tax rate of £827 a week.
What apprenticeships are available for finance providers?
Motor Finance Specialist Apprenticeship
The FLA is currently working with a group of employers, the London Institute for Banking & Finance (LIBF) and the Institute of the Motor Industry (IMI) to bring to market a Motor Finance Specialist Apprenticeship. The apprenticeship will:
- Provide a new route for attracting talent and upskilling existing employees
- Join up existing motor finance training which can form part of the knowledge based requirements of the apprenticeship. This includes our popular SAF competence test and level-3 SAF Advanced qualification as well as other industry training.
- Provide an apprenticeship training channel which enables levy paying motor finance providers to offset against their levy payments.
We expect the apprenticeship to come to market in early July with further information to be posted on this page in due course.
For more details please contact James Marquette by e-mailing email@example.com or calling 020 7420 9613.