All firms with wage bills in excess of £3M will pay an apprenticeship tax from April 2017, it has been revealed.
Chancellor George Osborne said the cross-industry apprenticeships levy would be set at 0.5% of wage costs – but offset against a £15,000 allowance.
The levy is expected to raise £3bn by 2019/20 as the government continues with its commitment to skills training.
Documents released alongside the spending review said: “The levy will put control of apprenticeship funding in the hands of employers and will encourage employers to invest in their apprentices and take on more.
“Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay into the levy, through a top-up to their digital accounts.
“All employers who do not pay the levy will be able to access government support for apprenticeships.”
The government also said it would establish an employer-led body to set apprenticeship standards and ensure quality.
This body will be independent of government and will advise on the level of levy funding each apprenticeship should receive. Funding caps will be significantly higher for programmes which have high costs and are of high quality, said the spending review document.
The Construction Industry Training Board, which manages the sector’s existing skills levy, warned in July that money raised from the government’s proposed apprenticeships levy would fail to cover all the construction industry’s training needs.